Why HPE Stock Is Rising Ahead of Its Investor Event

Hewlett Packard Enterprise will hold its networking investor day on Wednesday. (Dreamstime)

Key Points

• Hewlett Packard Enterprise shares rise as the company projects solid revenue growth for its networking business segment driven by AI demand.
• The company forecast fiscal 2027 networking revenue growth between the high teens and low 20s percent.
• Vultr placed a $1.2 billion order for AMD Helios AI Rack by HPE systems, marking the first order for the new system.

Shares of Hewlett Packard Enterprise rose on Wednesday after the company said it expects solid revenue growth for its networking business segment as artificial intelligence drives demand.

HPE stock advanced 4.6% to $64.30 in premarket trading on Wednesday after ending Tuesday down 1.8%. Shares have risen 156% this year as of the closing bell on Tuesday.

Investors were buying shares after HPE outlined fiscal 2027 and long-term revenue growth expectations for its networking business segment ahead of its “networking investor day.”

The company forecast revenue growth in fiscal 2027 on a percentage basis between the high teens and the low 20s, with operating margin in the mid-to-high 20s.

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HPE expects annual revenue growth from fiscal 2026 to fiscal 2029 for the networking business to grow on a percentage basis in the high-teens and that the segment will maintain an operating margin target in the mid-to-high 20s between fiscal 2027 and fiscal 2029.

The company’s networking business encompasses “data-center networking, routing, and campus & branch.” The segment serves enterprise and service provider customers, including hyperscalers and the so-called neoclouds which sell artificial-intelligence computing power.

Specifically for its data-center networking business, HPE projects annual revenue growth on a percentage basis in the low-to-high 50s through fiscal 2029.

Along with the revenue forecasts, HPE said Vultr, a major private cloud infrastructure company, made a $1.2 billion order for AMD Helios AI Rack by HPE systems, which is a direct competitor with Nvidia’s advanced AI data-center architecture.

HPE said it was the first order for the new system, which features “purpose-built” HPE networking hardware and software.

HPE and Advanced Micro Devices will support Vultr’s effort to meet service provider and enterprise demand for model training and inferencing workloads in their AI data centers, according to the media release.

The flurry of announcements came ahead of HPE’s investor event, which begins at 11:30 a.m. Eastern time. The company plans to share how it can capture demand created by the AI opportunity and how its networking segment can be a key growth driver.

“HPE is positioned to capture that demand through an integrated networking portfolio, expansive go-to-market scale, and greater cross-sell capabilities. Together, these advantages strengthen our ability to deliver sustainable, profitable growth and create long-term shareholder value,” HPE executive Rami Rahim said in the media release.

Write to Kit Norton at kit.norton@barrons.com

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