SPRING, Texas — Hewlett Packard Enterprise (HPE) raised its full-year profit outlook Monday, signaling that a massive surge in artificial intelligence infrastructure spending is more than offsetting the challenges of a constrained global supply chain.
The Texas-based tech giant now expects fiscal 2026 adjusted earnings to land between $2.30 and $2.50 per share, up from its previous guidance. The optimistic shift comes as the company reports that orders for AI-related networking and servers are flooding in faster than it can ship them.
The cornerstone of HPE’s recent success is its networking segment, which has been supercharged by the integration of Juniper Networks. For the first fiscal quarter of 2026, networking revenue skyrocketed by 152% year-over-year to $2.7 billion.
Management was so encouraged by the performance that it hiked its annual revenue growth expectations for the networking unit to a range of 68% to 73%.
“Our results reflect a newly combined networking innovation engine and effective operational discipline,” CEO Antonio Neri told investors during the earnings call. “Demand is strong, with orders increasing double digits across every single segment of our business.”
While demand is at record levels, HPE is navigating a “dynamic” supply environment. The company revealed a massive AI systems backlog exceeding $5 billion, as enterprise and sovereign customers scramble to secure the hardware necessary to run large-scale AI models.
CFO Marie Myers noted that while the company is prioritizing higher-margin orders to navigate rising component costs—particularly in memory chips like DRAM and NAND—the sheer volume of demand has created a bottleneck.
“Given the supply dynamics, our strategy for the remainder of the year focuses on the most profitable opportunities,” Myers said. “This may impact the sheer pace of AI systems revenue growth, but it ensures we are delivering quality earnings.”
HPE’s performance stands in contrast to a volatile broader market. While rival Dell Technologies has also seen an AI-driven boom, HPE’s strategic pivot toward high-margin networking appears to be its primary differentiator.
The company also boosted its free cash flow projection for the year to at least $2 billion, a sign of confidence in its liquidity and ability to manage the costs associated with the Juniper acquisition.
As Big Tech firms like Microsoft and Meta prepare to spend an estimated $630 billion on AI infrastructure this year, HPE is positioning itself not just as a server provider, but as the essential “plumbing” for the AI era.
