Hewlett Packard Enterprise Co

What they do

HPE sells servers (including AI-optimized systems), storage, networking (including Juniper products), and financial services, with a growing focus on HPE GreenLake as-a-service offerings. Its operations are organized into two main segments: Networking and Cloud AI, which includes server, storage, and financial services. The company serves customers ranging from SMBs to large global enterprises and governmental entities.

Revenue drivers

• Networking — Includes Campus Branch, Data Center Networking, Security, and Routing; Q2 FY26 revenue was $2.7 billion, up 148.2% year-over-year, driven by the Juniper acquisition.
• Cloud AI - Server — Largest sub-segment; Q2 FY26 revenue of $5.5 billion, up 32.7% year-over-year, reflecting demand for AI and traditional servers.
• Cloud AI - Storage — Q2 FY26 revenue of $1.2 billion, up 2.4% year-over-year; includes HPE storage solutions.
• Cloud AI - Financial Services — Provides financing and lifecycle services; Q2 FY26 revenue of $0.9 billion, up 5.6% year-over-year.

Recent performance

In fiscal Q2 2026 (quarter ended April 30, 2026), HPE reported record revenue of $10.7 billion, up 40% year-over-year, with GAAP diluted EPS of $0.44 and non-GAAP EPS of $0.79, both above guidance. GAAP gross margin was 36.5%, up 810 basis points. Operating cash flow was $1.4 billion and free cash flow was $0.9 billion, both significantly improved. For fiscal 2025 (ended October 31, 2025), revenue was $34.30 billion but net income was only $57 million, with diluted EPS of -$0.04.

Strategy

HPE is executing a data-first modernization strategy focused on AI, hybrid cloud, and networking, leveraging the Juniper Networks acquisition to build a full networking stack. The company is pivoting to a platform-based, software- and services-rich model with HPE GreenLake as a hybrid cloud centerpiece. Management also emphasizes transitioning to proprietary storage to improve profitability and reducing reliance on third-party products. Key priorities include scaling AI infrastructure (servers, supercomputing, liquid cooling), capturing 'AI for Networks' and 'Networks for AI' opportunities, and achieving cost synergies from Juniper and other initiatives.

Risks

• Integration risk — Failure to successfully integrate Juniper Networks, including legal proceedings and achieving synergies, could harm financial results.
• Competition — Intense competition from major and emerging competitors, especially in AI infrastructure, could pressure pricing and market share.
• Macro uncertainty — Global trade restrictions, tariffs, and geopolitical tensions could raise component costs and disrupt supply chains.
• Supply chain dependency — Dependence on third-party and single-source suppliers could lead to shortages and higher costs.

Outlook

Management raised fiscal 2026 guidance: revenue growth of 29% to 33%, GAAP diluted EPS of $2.42 to $2.52, and non-GAAP EPS of $3.35 to $3.45. For Q3 FY26, they expect revenue of $11.5B to $12.1B and GAAP EPS of $0.84 to $0.89. Management says the company is two years ahead of its fiscal 2028 long-term financial plan and introduced a fiscal 2027 growth framework.