Hewlett Packard Enterprise's fiscal 2026 financial outlook came in below Wall Street expectations amid slowing growth in its networking business. HPE stock fell after it hosted an analyst meeting.
HPE projected revenue growth of 5% to 10% in fiscal 2026 at the analyst meeting in New York on Wednesday. In the current fiscal year, which ends Oct. 31, HPE has estimated 15% growth.
Its financial outlook includes recently acquired Juniper Networks.
At Evercore ISI, analyst Amit Daryanani said in a report: "HPE guided networking growth to low–mid single digits for fiscal 2026 because the year is deliberately focused on integrating Juniper with Aruba and harmonizing sales motions. Management noted that they expect more visible revenue synergies post-2026 with operating margins expected to progress from the low-20s to 25%–28% longer term on cost synergies, scale, and mix uplift from AI data center switching."
For the networking business, HPE said it expects sales growth in a range of 5% to 7% for fiscal years 2026 to 2028.
The maker of computer servers, networking equipment and data storage systems projected adjusted earnings per share of $2.20 to $2.40 for its next fiscal year, below analyst forecasts of $2.43.
"Fiscal 2026 networking guidance underwhelmed for the business, though we largely believe due to management conservatism and some tough compares," said Barclays analyst Tim Long in a report. "Margin guidance remains pressured from the AI server business, though management continues to see legs in the top-line story, particularly with a sovereign and enterprise focus."
Long added: "Fiscal 2026 networking operating margins are expected to be low 20%s, while cloud and AI are 7% to 9%."
AI Server Competition Heats Up
Wall Street analysts have been focused on artificial intelligence-related server revenue growth in HPE's data center business. Competition with Dell Technologies in AI servers has heated up.
On the stock market today, HPE stock retreated 8% to 23 in morning trading. HPE stock hit a record high of 26.44 on Oct. 8. Shares have climbed 17% in 2025.
In June, the Department of Justice agreed to let HPE's $14 billion acquisition of Juniper move ahead.
"HPE introduced a new segmentation framework that reduces disclosure while introducing some new metrics," said Raymond James analyst Simon Leopold in a report. "The new networking segment includes the former Juniper businesses with campus, data center, WAN and security along with HPE's Intelligent Edge. The Cloud & AI segment incorporates traditional servers, AI platforms, storage and financial services. HPE will continue to break-out the AI platforms, but the reduced detail of the remaining elements presents a risk."
HPE Stock: Shareholder Returns
The company also plans to increase its annual dividend for the next fiscal year by 10%, to about 57 cents, from 52 cents.
The company's board also authorized an additional $3 billion in capacity for share repurchases, bringing its total repurchase authorization to about $3.7 billion.
Still, UBS analyst David Vogt in a report said shareholder returns may be limited.
"With leverage at three times and an estimated $600 million in restructuring cash outlays in fiscal 2026, equity friendly initiatives like aggressive buybacks or retiring the pref are unlikely to buffer the share price decline with debt pay down the primary use of cash at least the next 24 months," he said.
The IBD Methodology: How To Invest In Stocks While Managing Risks
HPE reported fiscal third quarter earnings of 44 cents per share on an adjusted basis, down 12% from a year earlier. The company's core computer server business has struggled with margin pressures.
Wall Street analysts have been focused on artificial intelligence-related server revenue growth in HPE's data center business. Competition with Dell Technologies in AI servers has heated up.
HPE Stock Technical Ratings
In June, the Department of Justice agreed to let HPE's $14 billion acquisition of Juniper move ahead.
Heading into the HPE investor day, the tech stock owns an IBD Composite Rating of 83 out of a best-possible 99, according to IBD Stock Checkup.
Meanwhile, HPE stock holds an Accumulation/Distribution Rating of B. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
