Story
HPE Boosts Networking Forecast, Announces $1.2B AI Server Order from Vultr
Summary
Hewlett Packard Enterprise has significantly increased its long-term revenue growth forecast for its networking division, citing strong demand from the AI sector. The company also announced a $1.2 billion order to supply AI server racks to cloud provider Vultr.
Hewlett Packard Enterprise (HPE) on Wednesday significantly raised its long-term revenue growth forecast for its networking business and announced a major AI infrastructure deal, signaling strong momentum from the artificial intelligence boom. The company's shares rose nearly 6% in premarket trading following the announcements at its networking investor day.
Upgraded Growth Outlook
HPE now anticipates its networking segment revenue will grow at a compound annual growth rate (CAGR) in the high teens from fiscal 2026 to fiscal 2029. This is a substantial upgrade from its previous forecast of 5% to 7% annual growth for the period of fiscal 2025 through 2028.
For the nearer term, the company also lifted its fiscal 2027 networking revenue growth target to a range of the high teens to low 20s percent, up from a prior forecast of 14% to 17%. The company attributed the bullish outlook to surging demand for high-performance networking required for AI applications.
"AI is reshaping the technology stack, making the network more strategic and driving significant new demand from enterprises and service providers," said Rami Rahim, head of HPE's networking unit, in a statement.
Vultr Deal and Juniper Synergies
AdUnderscoring the demand for its AI-focused hardware, HPE announced a $1.2 billion order from cloud computing firm Vultr. HPE will provide AMD Helios AI racks, which are equipped with AI chips as well as HPE's own networking switches and software, for Vultr's data centers in the United States.
The company also increased its cost-savings targets related to its acquisition of Juniper Networks last year. HPE now expects to achieve $800 million in annual run-rate cost savings by the end of fiscal 2028, an increase from its earlier target of at least $600 million.
Market Context
The upgraded forecasts and major contract win highlight HPE's efforts to capitalize on the enterprise shift toward AI, positioning it to compete more effectively with rivals like Dell and Super Micro Computer. The company's networking division, expanded by the Juniper acquisition, provides the critical infrastructure that connects servers and data centers essential for powering AI workloads.
Read next
More on Stocks
Intuitive Machines Stock Rebounds Amid Broader Market Rally
Shares of space infrastructure firm Intuitive Machines (LUNR) climbed in morning trading, recovering from a recent slump in a move attributed to a technical rebound and positive market sentiment rather than new company-specific catalysts.
Citi Downgrades Dow and LyondellBasell to Neutral, Citing Weak Polyethylene Demand
The bank lowered its price targets for both chemical companies, arguing that weak end-market demand is overriding support from high oil prices and will cap gains for polyethylene.
Eli Lilly Shares Gain After Experimental Obesity Drug Shows 23.3% Weight Loss in Trial
Eli Lilly reported that its experimental drug combination, EloraTZP, achieved an average weight loss of 23.3% in a Phase 2 trial, outperforming its blockbuster drug tirzepatide and boosting its stock price.
Mosaic Stock Slips as Margin Pressures and Rising Short Interest Weigh
Shares of the fertilizer producer fell in morning trading, underperforming the broader market as investors continue to grapple with the impact of high input costs, a recent executive change, and growing bearish sentiment.