Hewlett Packard Enterprise $HPE experienced one of the most growthful days in its modern history. Shares jumped more than 34% after the results were released.
Record quarter beat Wall Street expectations
HPE reported record revenue of $10.68 billion for its fiscal second quarter , up 40% year-over-year. Meanwhile, analysts were expecting approximately $9.8 billion. Adjusted earnings per share came in at $0.79 versus expectations of $0.53. The company beat consensus on all key metrics.
CEO Antonio Neri called the results evidence of strong demand for infrastructure upgrades and AI solutions. It was the server and network business that became the main driver of growth.
AI backlog reaches historic levels
One of the most watched indicators was the so-called AI backlog, i.e. the value of contracts already signed and to be executed in the coming quarters.
HPE reported a backlog in excess of $6.3 billion. Approximately 61% of that value comes from government and large enterprise customers. CFO Marie Myers said:
"The majority of these orders will be executed in the second half of the year."
This is because investors are not only evaluating current results, but more importantly future revenue. The large backlog suggests that growth may not end even after the current AI euphoria fades.
HPE is rewriting its own long-term targets
Management also announced something that doesn't happen often on Wall Street. In fact, the company has raised its outlook so much that it expects to meet financial targets originally planned for 2028 during 2026.
HPE now expects:
29% to 33% revenue growth in 2026
networking segment growth of 72% to 75%
adjusted earnings per share between $3.35 and $3.45
significantly higher free cash flow than originally forecast
Such an aggressive increase in outlook is clear evidence that the current demand for AI infrastructure has surprised even the company's own management.
Competitive environment: Dell and Super Micro
HPE's results also confirm a trend that investors have been watching for several months. Alongside chipmakers, AI server companies are also starting to benefit significantly.
In particular, HPE's biggest competitors include Dell Technologies $DELL and Super Micro Computer $SMCI.
Dell recently announced record AI server orders and also raised its outlook. Super Micro, in turn, is one of the fastest growing suppliers of server solutions built on Nvidia $NVDA chips.
Network infrastructure as the new AI winner
Interestingly, HPE's fastest growing segment was not servers themselves, but networking. The networking division's sales grew more than 148% year-on-year, with datacenter networking growing over 230%.
Training and running AI models doesn't just require powerful processors. Just as important are fast network connections between thousands of servers. Companies that supply this infrastructure are therefore becoming key players in the entire AI ecosystem.
A strategic view
HPE has long been one of the relatively overlooked technology companies. Investors preferred growth titles like Nvidia or Palantir $PLTR, and HPE was seen more as a traditional server manufacturer.
However, recent results show that this "boring" infrastructure may be one of the biggest beneficiaries of the AI investment wave.
Positive factors include:
record AI backlog
significantly increased management outlook
growing demand from enterprise customers
strong growth in the networking segment
expected acceleration of shipments in the second half of the year
On the other hand, one has to take into account that the stock is already factoring some of the future optimism into the current price after the sharp rise. Investors should therefore particularly monitor the pace of conversion of backlog into actual sales and the development of margins in the AI server segment.
Towards the evening, however, the stock sold off even after a significant increase. For investors, the price per share was simply too high already. The company still maintains 17% growth, but the stock, which is 35% above its intrinsic value according to the Fair Price Index , had to get cheaper.
The $HPE results confirm that the current AI revolution is not just a chipmaker story. Alongside companies like Nvidia, a new group of winners is emerging to supply the servers, data centers and network infrastructure needed to run AI.
Record sales, more than six billion dollars in AI backlog and a significantly increased outlook show that demand for AI infrastructure remains extremely strong. If this trend continues, companies like HPE, Dell and Super Micro could be among the major beneficiaries of the next phase of the AI investment cycle.