March 9 (Reuters) – Hewlett Packard Enterprise forecast second-quarter revenue above Wall Street estimates on Monday, betting on growing demand for its artificial intelligence-powered servers.
The company, which provides servers equipped with Nvidia’s chips, raised fiscal 2026 forecasts for adjusted earnings per share and networking segment.
Big Tech firms like Alphabet, Microsoft, Amazon and Meta are expected to spend at least $630 billion to build AI infrastructure this year, which would boost demand for server and data center equipment from vendors such as Dell, HPE and Super Micro Computer.
“Demand for our products and solutions was strong, with orders increasing double digits year over year across all segments,” HPE CEO Antonio Neri said in a statement.
Shares of the company rose around 2% in extended trading on Monday. The stock has fallen around 9% so far this year, underperforming rival Dell’s 16.4% gains.
HPE jostles with Dell and Super Micro Computer in a highly competitive market as they navigate surging memory chip costs due to the buildout of AI infrastructure, forcing companies to increase prices in a bid to offset cost pressures.
Almost all servers have memory chips that hold data and instructions, keeping processors running at high speed, which is paramount for AI applications.
The company expects quarterly revenue to be between $9.6 billion and $10.0 billion, above the analysts’ average estimate of $9.58 billion, according to data compiled by LSEG.
HPE said its AI backlog exceeded $5 billion in the first quarter, with enterprise and sovereign customers representing 64% of the cumulative order mix. It had an AI backlog of $4.7 billion in the fourth quarter.
Revenue rose around 18% to $9.30 billion for the quarter ended January 31, missing estimates of $9.33 billion. Its adjusted EPS of 65 cents exceeded estimates of 59 cents.
HPE raised its fiscal 2026 adjusted EPS forecast to $2.30 to $2.50, compared with its prior expectations of $2.25 to $2.45.
The company also raised its annual revenue growth expectations for the networking segment to 68% to 73%.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Alan Barona)
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