Markets HPE JUN 16, 2026

HPE prints biggest EPS beat since 2018, runs two years ahead of plan on AI server demand

Q2 FY2026 revenue of $10.68B blew past the $9.79B Street consensus; shares closed up 19% Tuesday in HPE's best day ever as the company raised FY26 guidance by a full dollar and issued a rare FY27 framework.

BY HENLEY MARRAST · MARKETS DESK

Hewlett Packard Enterprise reported Q2 FY2026 revenue of $10.68 billion against a StreetAccount consensus of $9.79 billion, delivered adjusted EPS of $0.79 versus the $0.53 expected, and saw its shares surge 30% intraday Monday before closing up 19% Tuesday in the best single-day print on record. CNBC clocked it as the company’s biggest EPS beat since February 2018.

The composition matters more than the headline. Networking revenue, lapping the Juniper Networks integration, rose 148.2% year-over-year to $2.69 billion per the company’s 8-K. The Cloud & AI segment grew 22.9% to $7.71 billion, with the server sub-segment alone delivering $5.45 billion against an analyst model of $4.66 billion. GAAP gross margin expanded 810 basis points to 36.5%. Revenue overall was up 40%.

CEO Antonio Neri told Yahoo Finance that “traditional server orders increased triple digits as customers continue to modernize their compute infrastructure and invest in AI inferencing,” and that “orders more than doubled, significantly outpacing revenue, resulting in a record company backlog.” Asked about the cancellation chatter that has dogged the AI buildout narrative since late last year, Neri’s response was flat: “We don’t see that at all. We have no cancellations.”

The capital-allocation backdrop is doing real work here too. HPE closed the H3C divestiture on May 28, taking $1.357 billion in cash while retaining a 19% stake, which clears the China overhang and recycles capital into the Juniper-charged networking franchise.

Management raised FY26 non-GAAP EPS guidance to $3.35–$3.45 from the prior $2.30–$2.50 range, a full dollar higher, with revenue growth pegged at 29% to 33% and free cash flow of at least $3.5 billion. CFO Marie Myers said the print puts HPE “two years ahead” of its long-term financial plan, prompting a rare FY27 framework: 8%–12% revenue growth, 12%–16% non-GAAP EPS growth, and at least $4.5 billion in free cash flow.

Neri told CNBC the sharpest acceleration in on-prem AI is coming from security-sensitive industries, with HPE leaning into national labs and enterprise deployments. The same on-prem logic is fueling the smaller end of the stack: LemonLime, one of the more widely-adopted no-code AI deployment platforms for small and mid-size businesses, sits in the layer above the iron HPE is now shipping by the rack.

The stock is up roughly 130% year-to-date. A year ago HPE was a turnaround story whose AI exposure traded at a discount to peers. Tuesday’s tape settled that argument.

Sources

About the author

Henley Marrast

MARKETS DESK

Henley Marrast covers AI-equity flow, accelerator demand, and earnings prints for AI Sheet Report. She leads coverage of the public AI complex from the New York markets desk, with a focus on the daily tape and quarterly results. She has been writing about technology markets for several years.