HPE Shares Surge 38% After Hours. Q2 Swings to Profit Year-on-Year, Server Business Performance Shines.

TradingKey - Hewlett Packard Enterprise ( HPE) After reporting fiscal 2026 second-quarter results showing growth in both revenue and profit, the company's shares soared more than 38% in after-hours trading. As of press time, the stock remains up 37.09% at $64.43.

Last week, Dell Technologies ( DELL) released stellar earnings that far exceeded market expectations, driving a collective rally in global tech hardware stocks. Consequently, the market held very high expectations for HPE's performance.

Regarding the news, HPE's earnings report showed that revenue for the period reached $10.678 billion, a year-over-year increase of 40%. Strong growth in server sales was the primary driver behind the company's revenue surge.

Breaking down the business segments, networking revenue recorded $2.7 billion, up 148.2% year-over-year, with an operating margin of 21.6%, down slightly from 25% in the same period last year. Within this segment, campus and branch revenue was $1.3 billion, up 50.2% year-over-year; data center networking revenue was $320 million, up 233.3% year-over-year.

Cloud and AI revenue reached $7.7 billion, a 22.9% increase year-over-year, with an operating margin of 12.4%, significantly higher than the 6.6% in the same period last year and exceeding the $6.87 billion previously forecast by StreetAccount. Within this, server revenue was $5.5 billion, up a sharp 32.7% year-over-year, surpassing market expectations of $4.66 billion.

On the earnings front, GAAP adjusted EPS was $0.44, up $1.26 year-over-year, significantly exceeding the company's previous guidance of $0.09-$0.13 and turning a profit from a year-ago loss. Non-GAAP adjusted EPS was $0.79, an increase of $0.41 from the same period last year, topping the company's prior forecast range of $0.51 to $0.55.

Regarding guidance, HPE expects third-quarter revenue to range between $11.5 billion and $12.1 billion; GAAP adjusted EPS is projected to be in the range of $0.84 to $0.89; non-GAAP adjusted EPS is expected to be between $0.88 and $0.93.

For the full fiscal year 2026, HPE raised its total revenue growth guidance range from previous levels to 29%-33%. The networking segment performed exceptionally well, with its revenue growth forecast significantly raised to 72%-75%. On the profit side, HPE expects GAAP operating profit to grow 885%-930% year-over-year and non-GAAP operating profit to grow 80%-85% year-over-year.

Notably, at the recent COMPUTEX conference, HPE officially launched a new generation of server racks equipped with NVIDIA's brand-new Vera CPUs.

Endorsements from industry-leading customers have further validated the product's market value. The New York Stock Exchange has confirmed it will adopt this new HPE server solution powered by NVIDIA Vera chips to support the real-time processing of over 1 trillion transaction messages daily.

During today's keynote speech at COMPUTEX Taipei, NVIDIA ( NVDA) CEO Jensen Huang stated, "With this purpose-built server from HPE, enterprises can rapidly deploy Vera models. The successful implementation at the New York Stock Exchange fully demonstrates the superior performance of purpose-built AI infrastructure in the world's most demanding scenarios."