HPE sees revenue above estimates, targets networking orders

Hewlett Packard Enterprise said it expects Q2 revenue above Wall Street estimates and raised its fiscal 2026 adjusted EPS outlook.

The company said it is prioritizing higher-margin product orders and is focusing on demand for networking equipment.

HPE reported Q1 revenue of US$9.3 billion, up about 18%.

Adjusted EPS was US$0.65, above the US$0.59 estimate, while revenue narrowly missed the US$9.3 billion forecast.

The company set Q2 revenue guidance at US$9.6 billion to US$10.0 billion, above the LSEG average estimate of US$9.6 billion.

HPE said its AI backlog topped US$5 billion in Q1 with enterprise and sovereign customers making up 64% of orders.

It raised fiscal 2026 adjusted EPS guidance to US$2.30 to US$2.50 and lifted networking revenue growth expectations to 68% to 73%; the networking unit includes the newly acquired Juniper Networks.

Shares rose about 1.3% in after-hours trading and the company acknowledged it does not have enough supply to meet current demand and said elevated prices are expected to persist through 2027.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

HPE is leaning more on networking, with cloud and servers as add-ons

HPE’s faster network business growth, plus the acquisition of Juniper Networks (a major networking hardware and software vendor), has shifted more of HPE’s revenue mix toward networking and what HPE calls “AI-native” networking positioning, meaning network products built to better support AI workloads 1.
In the first quarter, the networking segment’s revenue jumped 151.5% year over year to US$2.706 billion 2.
Margins back the move into better-paying lines. The networking segment operating margin reached 23.7%, compared with 10.2% for Cloud & AI, which includes servers 2.
HPE has said it expects more than 50% of company operating profit to come from networking in the context of the Juniper deal 3.

HPE is picking a higher-margin lane in the AI rush

HPE has described handling AI demand with discipline, focusing on enterprise and sovereign opportunities instead of pursuing every large service-provider deal despite a large AI backlog 4.
Its focus on “sovereign” and enterprise AI aims at customers that want tighter data control and compliance. These projects can require more services and often move through longer procurement cycles 5.
HPE pairs HPE Aruba Networking (HPE’s networking business) with Juniper’s portfolio and frames the combined lineup as an “AI-native” approach across campus and branch, data center switching, plus routing that raises competitive pressure on Cisco 2.
Execution remains the main risk. At Discover Barcelona 2025 (HPE’s annual customer and partner conference), executives said they plan to “move forward with everything” in the combined portfolio, though large integrations can still muddy product roadmaps and support plans 5.