Hewlett Packard Enterprise (HPE) Stock Drops After Record Earnings as Supply Crunch Weighs

TLDR

• HPE reported record fiscal Q3 adjusted EPS of $1.11, beating estimates of $0.93, with revenue of $12.2 billion, up 34% year over year
• Cloud and AI revenue hit $9 billion, up 25%, while networking revenue surged 75% to $2.9 billion
• HPE raised its fiscal 2026 revenue growth forecast to 34%-37% and lifted its fiscal 2027 outlook to 13%-17% growth
• Stock fell over 5% in after-hours trading despite the beat, as investors worried about margin pressure and supply constraints
• CEO Antonio Neri warned supply availability will remain “very constrained” through 2028, with memory the biggest bottleneck

HPE stock was down more than 5% in after-hours trading on Wednesday after the company posted record earnings and revenue for its fiscal third quarter. The stock had gained 116% this year heading into the report.

Hewlett Packard Enterprise Company, HPE

Adjusted EPS came in at $1.11, up from $0.44 a year ago and well ahead of the $0.93 analyst consensus. Revenue of $12.2 billion rose 34% year over year and topped the $12 billion Wall Street expected.

Cloud and AI revenue reached $9 billion for the quarter, up 25% from the prior year. Server revenue rose 35% to $6.8 billion. Networking revenue jumped 75% to $2.9 billion.

HEWLETT PACKARD ENTERPRISE $HPE Q3’26 EARNINGS HIGHLIGHTS

🔹 Revenue: $12.2B (Est. $11.91B) 🟢; +34% YoY
🔹 Adj. EPS: $1.11 (Est. $0.93) 🟢
🔹 Non-GAAP Gross Margin: 40.4%; +1,050 bps YoY
🔹 Non-GAAP Operating Margin: 16.2%; +770 bps YoY

Raises FY26 Guide:
🔹 Non-GAAP EPS:… pic.twitter.com/sMhRlU3X4u

— Wall St Engine (@wallstengine) September 2, 2026

HPE also announced an extended collaboration with Oracle to deploy HPE Juniper Networking across Oracle’s AI data centers.

CEO Antonio Neri called it “turning exceptional demand into durable, profitable growth.”

Despite that optimism, the market reaction was cool.

Supply Constraints Expected Through 2028

The company’s biggest headache right now is getting enough components to meet demand. CFO Marie Myers said memory is the biggest bottleneck, followed by NAND, CPUs, and drives.

“Demand is far outstripping supply,” Myers told Reuters.

HPE has signed longer-term supply agreements to improve access to key components, but shortages are still expected to affect order fulfillment and margins.

Management guided for operating margin to decline sequentially in the October quarter, driven by a higher mix of AI systems and pricing pressure.

Neri said he does not expect supply constraints to ease “anytime soon” and sees the headwinds continuing through 2028.

HPE’s inventory stood at $11.82 billion at the end of July, up from $7.16 billion a year earlier. Myers said the rise reflects higher commodity costs and targeted purchases to support growing orders and backlog.

HPE Lifts Full Year and 2027 Outlook

HPE raised its revenue growth forecast for fiscal 2026 to between 34% and 37%, up from a prior range of 29% to 33%.

For the October quarter, it guided revenue of $13.9 billion to $14.8 billion, with the midpoint above the $13 billion analyst consensus. Adjusted EPS guidance of $1.20 to $1.30 also topped the $1.07 estimate.

The company also raised its fiscal 2027 revenue growth forecast to 13% to 17%.

HPE closed its acquisition of Juniper Networks in July 2025 to expand its networking business, which is now expected to grow 73% to 74% for the full fiscal year.

Myers noted that enterprise AI adoption is “really starting to settle in,” with the company expecting that trend to support growth beyond the current fiscal year.

The results follow stronger forecasts from Dell Technologies and Super Micro Computer, as the tech sector collectively prepares to spend more than $730 billion on AI infrastructure this year.

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