Hewlett Packard Enterprise reported fiscal third-quarter earnings and revenue that edged above Wall Street's targets. However, HPE stock rose amid October-quarter guidance that was slightly below expectations despite growing sales of artificial intelligence servers in data centers.
The maker of computer servers, networking equipment and data storage systems reported fiscal Q3 results after the market close on Wednesday.
For the quarter ended July 31, HPE sales rose 19% to $9.1 billion. Its fiscal Q3 included about a month of financial results from its acquisition of Juniper Networks, which closed on July 2.
Meanwhile, HPE earnings fell 12% to 44 cents per share on an adjusted basis. The company's core computer server business has struggled with margin pressures.
AI Server Competition Heats Up
Analysts expected HPE earnings of 42 cents a share on sales of $8.84 billion.
For the current quarter ending in October, the company forecast adjusted EPS of 58 cents per share vs. estimates for 56 cents. HPE said it expects revenue in a range of $9.7 billion to $10.1 billion. At the midpoint, the sales outlook came in below estimates for $10.1 billion.
On the stock market today, HPE stock rose nearly 4% in early trading to 23.70. Shares were up 6% in 2025 prior to the HPE earnings report.
Wall Street analysts have been focused on artificial intelligence-related server revenue growth in HPE's data center business. Competition has heated up with Dell Technologies in AI servers.
"AI systems revenues came in at $1.6 billion (versus $1 billion in Q2)," said Barclays analyst Tim Long in a report. "Management highlighted enterprise and sovereign contribution, which now make up half of cumulative AI orders since fiscal 2023. Sovereign orders were up triple digits and enterprise orders were also up year-over-year."
Long added: "Q4 AI revenues were guided to tick down over 30% quarter-over-quarter after a large deal in Q3 shipped. We model fiscal 2025 AI systems revenues of $4.6 billion. HPE maintains the pipeline is multiples of backlog (which was $3.7 billion at the end of the quarter) and also noted a growing pipeline for private cloud AI. On the traditional server side, demand was healthy and revenues grew 12% year-over-year."
HPE Stock Technical Ratings
In June, the Department of Justice agreed to let HPE's $14 billion acquisition of Juniper to move ahead.
Heading into the HPE earnings report, the tech stock had an IBD Composite Rating of 80 out of a best-possible 99, according to IBD Stock Checkup.
Meanwhile, HPE stock holds an Accumulation/Distribution Rating of A-minus. 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.
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