HPE 2026财年第三季度业绩电话会：营收创历史新高，上调2027财年展望

随着人工智能（AI）基础设施需求和网络订单加速增长，惠普企业（Hewlett Packard Enterprise，NYSE：HPE）公布了创纪录的2026财年第三季度业绩。管理层上调了2026财年业绩指引和2027财年增长框架，同时警告称，供应限制仍是将需求转化为营收的主要制约因素。

核心要点

• 第三财季营收达到创纪录的122亿美元，同比增长34%。Non-GAAP毛利率为40%，营业利润为20亿美元，摊薄后每股收益（EPS）为1.11美元。
• 按标准化基准计算，订单增长42%，且超过营收增速，使公司积压订单创下历史新高。管理层表示，供应可用性仍是主要制约因素。
• 网络业务营收为29亿美元，按标准化基准计算同比增长10%，订单则增长了36%。AI网络订单创下7亿美元的季度新高。
• 云与AI业务营收增长25%至90亿美元。服务器营收增长35%，而AI系统订单环比增长超过30%至24亿美元。
• HPE将2026财年Non-GAAP每股收益指引上调至3.75-3.85美元，并将自由现金流指引上调至至少37.5亿美元。
• 对于2027财年，管理层目前预计营收增长为13%-17%，Non-GAAP每股收益为4.40-4.60美元，自由现金流至少为50亿美元。

主要财务业绩

业务与运营表现

网络业务

按标准化基准计算，网络业务营收增长10%至29亿美元。由于供应限制拖累了出货进度，订单增长36%，约为营收增速的3.5倍。

AI网络订单达到7亿美元，实现三位数增长，使2026财年累计订单达到22亿美元。HPE将该类别的全年目标从此前的水平上调至25亿-30亿美元。

按标准化基准计算，园区与分支机构（Campus & Branch）业务营收增长8%，路由器业务营收增长23%，安全业务增长12%。由于出货时间和供应受限，数据中心网络业务营收下降6%。网络业务营业利润率为22%。

HPE还宣布扩大与甲骨文（Oracle）的合作。甲骨文计划在为期多年、规模达数吉瓦（gigawatt）的AI云基础设施建设中，部署HPE Juniper QFX交换机、PTX路由产品、软件及AI运维能力。

管理层表示，瞻博网络（Juniper Networks）的整合工作仍超计划推进。HPE继续以截至2028财年末实现6亿美元的年化运行率成本节约额为目标。

云与AI业务

云与AI业务营收增长25%至90亿美元，超出管理层此前预期的展望。营业利润突破15亿美元，营业利润率达到17%，环比上升460个基点。

服务器营收增长35%，原因在于传统服务器平均售价（ASP）的提升抵消了受供应限制的出货量。管理层预计第四财季出货量增长将增强，但零部件可用性可能仍受限。

AI系统订单环比增长超过30%至24亿美元。营收接近16亿美元，积压订单环比增长14%创下新高。随着更多积压订单转化为收入，HPE预计第四财季AI系统营收将有所提升。

在拥有更高价值的HPE自有知识产权和私有云产品的支撑下，存储业务营收增长10%。Alletra MP订单和营收实现强劲的双位数增长，而私有云AI（Private Cloud AI）订单则增长了三位数。

本季度结束后，HPE与一家超大规模企业（hyperscaler）达成了一项价值数十亿美元的服务器协议，用于其内部AI推理工作负载。管理层强调，该交易并不代表重返供应传统第一梯队（Tier 1）云基础设施的业务。

GreenLake与金融服务业务

HPE GreenLake客户数量从一年前的44,000家增长18%至52,000家。管理层表示，客户正在扩大对GreenLake软件和智能云服务的使用。

HPE金融服务业务在融资规模、资产残值和净资产收益率（ROE）方面均创下第三季度历史新高。其净资产收益率超过了20%。

管理层业绩指引

2026财年第四季度

管理层预计，由于可变薪酬减少、Catalyst效率提升以及瞻博网络的协同效应，总运营支出将环比下降低单位数百分比。整体营业利润率预计将环比下降，主要是因为利润率较低的AI系统营收占比提升以及定价效应所致。

2026财年

HPE计划将第四财季自由现金流的至少75%回馈给股东。

2027财年业绩框架

2027财年框架包含了来自甲骨文协议和超大规模企业推理交易的初始贡献。管理层表示，该框架尚未包含来自AMD Helios机会的营收，并计划在第四财季结束后提供更完整的2027财年指引。

风险与关注焦点

• 供应限制仍是HPE面临的主要运营制约。管理层指出，DDR5、DDR4、NAND、闪存盘、晶圆产能和洁净室产能是主要的紧张领域。
• HPE已签署多年期供应协议，并使网络采购承诺环比翻了一倍多，但管理层预计供应限制将持续到2027财年。
• 随着AI系统在营收中的比重扩大以及传统服务器利润率回归正常水平，预计毛利率将从第三财季的创纪录水平有所回落。
• 由于大宗商品成本上升以及为支持未来出货和创纪录的积压订单而进行的采购，库存增至118亿美元。
• 持续强劲的订单并未立即转化为营收，因为出货时间取决于零部件可用性和积压订单的转化效率。

分析师问答环节亮点

管理层将需求的持续性归因于企业加速采用智能体AI（agentic AI）和推理技术，而非提前透支未来的支出。HPE表示，在多个AI相关领域，其意向订单（pipeline）规模仍数倍于积压订单。

在网络业务方面，管理层预计随着供应改善，营收增速将进一步逼近订单增速。HPE已锁定多年期产能承诺，为其更高的2027财年展望提供了支撑，不过预计订单增速仍将领先于营收增速。

公司将甲骨文的部署描述为既涵盖通过QFX产品实现的横向扩展（scale-out）交换，又涵盖通过PTX平台和HPE Juniper Express 5芯片实现的跨网拓展（scale-across）路由。

管理层表示，在更广泛的市场中，潜在的AMD Helios市场机会可能达到数百亿美元。HPE的纵向扩展（scale-up）交换机既可以随HPE Helios机柜出售，也可以出售给使用其他算力厂商的客户，但目前的2027财年网络业务框架尚未包含Helios的贡献。

HPE还表示，企业客户并未因零部件价格上涨而出现实质性的削减支出行为。据管理层称，客户正越来越多地评估本地（on-premises）AI基础设施，以优化Token经济性、安全性和控制力；HPE内部分析显示，与其公有云替代方案相比，其私有云AI产品最高可降低60%的Token成本。

电话会议完整文字实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good day, and welcome to the Third Quarter 2026 Hewlett Packard Enterprise Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mr. Shannon Cross, Chief Strategy Officer. Please go ahead.

Shannon Cross

Good afternoon. I'm Shannon Cross, Chief Strategy Officer for HPE. I'd like to welcome you to our fiscal 2026 third quarter earnings conference call with Antonio Neri, HPE's President and Chief Executive Officer; and Marie Myers, HPE's Chief Financial Officer.

Before handing the call to Antonio, let me remind you that this call is being webcast. A replay of the webcast will be available shortly after the call concludes. We have posted the press release and the slide presentation accompanying the release on our HPE Investor Relations web page.

Elements of the financial information referenced on this call are forward-looking and are based on our best view of our business and the external factors affecting us as we see them today. HPE assumes no obligation and does not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available at this time and could differ materially from the amounts ultimately reported in HPE's quarterly report on Form 10-Q for the fiscal quarter ended July 31, 2026.

Figures used in verbal remarks are rounded for ease of discussion. For more detailed information, please see the earnings materials as well as disclaimers relating to forward-looking statements that involve risks, uncertainties and assumptions. Please refer to HPE's filings with the SEC for a more detailed discussion of these risks. For financial information that we are showing on a non-GAAP basis, we have provided reconciliations to the comparable GAAP information. Please refer to the tables and slide presentation accompanying today's earnings release on our Investor Relations website for details.

Throughout this conference call, all revenue growth rates, unless noted otherwise, are presented on a year-over-year basis. Unless otherwise noted, all financial metrics and growth rates discussed today are non-GAAP and and EPS refers to non-GAAP diluted net earnings per share. Certain financial information featured in the presentation today has been normalized to include Juniper Networks results as of the beginning of HPE's fiscal year 2025.

Antonio and Marie will reference our earnings presentation in their prepared comments. We will also be disclosing records for certain financial metrics during the presentation. Please refer to our end notes in the presentation while reading these statements.

With that, let me turn it over to Antonio.

Antonio Neri

Thank you, Shannon. Good afternoon, everyone. Our strategy is proving itself again this quarter. We delivered another set of record financial results which demonstrates the durability of our profitable growth momentum and disciplined execution across the company. We exceeded all our company-wide financial commitments, achieving record results across revenue, gross margin, non-GAAP operating profit and earnings per share. AI has become a multiyear growth driver, expanding demand across our HPE portfolio. Customer demand in the quarter accelerated across both business segments with orders growing faster than revenues. We booked more orders than any prior quarter in our history, resulting in a record break in backlog for the company. Supply constraints continue to affect our ability to fulfill the increased customer demand. We are collaborating very closely with our partners to secure additional multiyear supply agreements. We're also providing our customers with alternative product configurations and deeper planning interlocks to better forecast supply availability.

In fiscal Q3, HPE delivered record revenue of $12.2 billion, up 34% from a year ago. Our HPE revenue growth year-to-date has risen about twice as fast as it did over the same period last year. HPE non-GAAP gross margin was a record of 40%. We generated record non-GAAP operating profit of $2 billion, 2.5x more than a year ago. Non-GAAP earnings per share was $1.11, another record and the first time we achieved more than $1 in non-GAAP EPS in a single quarter. Our outstanding operating results translated directly into stronger cash generation, resulting in our highest free cash flow ever for a third quarter at $958 million.

Last quarter, we updated our fiscal 2026 outlook and introduced our initial fiscal 2027 growth framework. Thanks to our record results, record orders and record backlog, we are raising our outlook for both fiscal 2026 and fiscal 2027. Marie will discuss the details shortly.

Before I hand over the call to Marie, I want to provide some observations about the market and our business segment performance. Also want to note an important milestone regarding our Juniper Networks acquisition. In August, a U.S. Federal Court approved our settlement with the Department of Justice, saying, "It serves the public interest." We are pleased with the outcome, which reinforces our confidence in the long-term value of bringing these two great networking portfolios together. A year after closing the Juniper Networks acquisition, our integration plan and cost synergies remain ahead of schedule. The business performance continues to strengthen through expanded innovation and strong execution. The enhanced ability to compete is already driving more innovative networking solutions for customers and higher profitable growth for shareholders.

Order bookings and revenue for our networking products and services reached record levels despite supply constraints, which limited our ability to convert the higher demand into revenue in the quarter. Campus & Branch had record revenue as customers modernize aging edge infrastructure and deploy AI-driven network operations. Orders were ahead of revenue, demonstrating the differentiation of our self-driving networks and the versatility across multiple cloud deployment models. Routing and data center switching demand accelerated in the quarter with orders substantially ahead of revenue and our backlog at its highest ever. Our backlog reflects strong customer demand from hyperscalers and neo clouds for our routers, switching NII-driven operations software, as they continue to increase their AI cloud CapEx infrastructure investments.

Growth in our backlog shows strong customer demand is running ahead of available supply. We expect to convert more orders into revenue in Q4, which give us even greater confidence in sustaining our networking growth in fiscal 2021.

Today, we announced an expanded collaboration with Oracle to accelerate gigawatt scale AI infrastructure. Oracle will deploy HPE Juniper networking routers and switches across one of the largest AI cloud infrastructure build-outs. HPE is uniquely positioned to support Oracle with a network for AI portfolio, which is one of the most comprehensive in the industry.

SASE and Security also contributed to our growth. Our strong performance in firewall, SD branch and branch SRX reflects growing customer demand for networking and security that operates as one converged solution. I hope you will attend our upcoming network in Investor Day later this month to hear more about how our networking strategy, innovation and business momentum are giving us even greater confidence in the opportunity ahead. While our networking segment continues to strengthen through our thoughtful integration, our cloud and AI segment continues to perform exceptionally well in a very supply-constrained environment. We delivered record revenue, operating profit and operating margin.

AI is beginning to inflect beyond early proof-of-concept trend in deployments into a broader enterprise workflow transformation opportunity. Customers are increasingly investing in new agentic AI applications and AI inferencing, requiring accelerated computing infrastructure, secure data storage access and enterprise-grade cloud management. Our comprehensive cloud and AI portfolio is perfectly positioned for this market inflection. We continued to experience strong demand across traditional servers, AI systems, storage, private cloud solutions and GreenLake cloud services.

The server product category drove the outperformance with high demand for our traditional servers and AI systems. We saw strong demand from large enterprises, neo cloud service providers and sovereign customers. We expect demand to remain exceptionally high as our pipeline remains multiples of our backlog. A fundamental shift in the server business is becoming quite clear. The way customers value their IT infrastructure is changing. Their focus is not just whether a server can run AI workloads, but also how it can enable entirely new business workflows using new AI applications.

We are seeing AI-related enterprise initiatives receive higher levels of investment than traditional IT projects. There is more top-level executive engagement in making those investment decisions, including company boards, which are championing AI technology to unlock further business transformation potential.

Storage had a standout quarter with record revenue. It benefited from our decision to focus on our own IP offerings by delivering a modern multi-data protocol platform for the AI era. Customers are beginning to evaluate where the AI workloads can be run most efficiently with the best secured data management and the lowest cost per token.

Organizations are still in the process of modernizing data storage environments while preparing for the next generation of AI-driven workloads and applications. They want data to be closed to their AI infrastructure and one control over sensitive information. These trends are driving strong demand for our HPE Alletra MP storage solutions. We are confident our comprehensive data storage value proposition will continue to accelerate this momentum in our storage business.

Our private cloud AI platform allows customers to manage enterprise AI applications and AI agents, while keeping control of data, government security and operations. Demand for PC AI is strong from enterprise customers that want to optimize the token economics of large-scale AI deployments on premises. That is rapidly scaling our order bookings and the size of our customer base.

Green Lake remains one of our greatest differentiators cause. It allows customers to manage infrastructure and software through a secure hybrid cloud operating model regardless of where our traditional and new AI workloads reside. Customers are broadening their utilization of our GreenLake cloud services, expanding their existing usage by consuming our new software and intelligent cloud services, which increases our net retention rates.

In Q3, the number of GreenLake customers grew 18% to 52,000, up from 44,000 a year ago. HPE Financial Services continues to deepen our customer relationships and offer a meaningful competitive advantage, which has become especially important as more customers look for financing options to help with their AI investments. As a result, HPE FS generated third quarter records in financing volumes residual value and return on equity.

In closing, HPE delivered another outstanding quarter, exceeding our company-wide commitments and demonstrating the ongoing differentiation in our strategy and its execution. As we look ahead, the same underlying drivers of our performance give us confidence in continuing to deliver higher profitable growth, higher cash flow generation and higher capital returns for shareholders. I want to thank our team members for their focus and strong execution so far this year. Our amazing talent and culture has set our performance apart this quarter and in fiscal 2026 to date.

With that, let me turn the call over to Marie. Marie?

Marie Myers

Thank you, Antonio, and good afternoon, everyone. We delivered another strong quarter, reflecting accelerating demand for AI and solid networking momentum, together with disciplined execution across the company. The demand environment remains robust as orders continue to outpace revenue. Investment in AI infrastructure is increasing at a rapid pace with enterprise spending focused on genic AI workloads and AI inferencing. Importantly, this opportunity is broadening across use cases, customer verticals and geographies, reinforcing the value of HPE's expanded portfolio and our ability to provide customers with integrated solutions across the enterprise technology stack. We remain focused on executing against strong customer demand navigating a dynamic supply environment, managing mix and input costs while driving operating leverage. This discipline is reflected in our financial performance, supporting durable, profitable growth in fiscal 2026 and 2027.

Let me walk you through the results. Revenue of $12.2 billion increased 34%, exceeding the high end of our guidance range with order growth up 42% on a normalized basis, led by demand and traditional service, AI systems and networking. Gross margin exceeded 40% driven by disciplined pricing in traditional servers and increased networking mix. Going forward, we expect our gross margin to moderate toward more historical levels driven by the growth in AI systems and the normalization in traditional service, offset by the growing mix of networking.

Operating expense was up 17% sequentially due to higher variable compensation reflecting our record financial results. We expect operating expense to decrease in FY '27 as variable compensation normalizes, and we see continued benefit from Catalyst transformation efficiencies and Juniper integration synergies. Operating profit was $2 billion, up nearly 40% sequentially. Operating margin of 16.2% expanded by 290 basis points sequentially, driven by gross margin expansion and operating leverage. EPS was $1.11, well above the high end of our guidance. GAAP EPS was $1.06. We delivered Q3 free cash flow of $958 million, driven by strong operating profit as well as collections.

Now let's turn to our segment results. Networking revenue of $2.9 billion was up 10% on a normalized basis, consistent with our outlook. Orders increased 36%, about 3.5x faster than revenue. Order growth was broad-based across the portfolio, led by AI infrastructure-related investments in data center switching and routing and strong demand for self-driving networks in campus and branch. Networks for AI demand accelerated in Q3, with orders reaching a new high of $700 million, up triple digits. Our portfolio and competitive position in scale-up and scale-out and scale across strengthened by the recent launch of our direct liquid cool Tomahawk 6 based switch at our differentiated PTX and MX routing portfolio.

Our pipeline continues to increase with further acceleration expected as we bring the Helios platform to market. We expect networks for AI to be a meaningful growth engine for the company. Cumulative networks for AI orders were $2.2 billion, surpassing our FY '26 target. As a result, we are increasing our year-end target to $2.5 billion to $3 billion. To meet this order growth, we have more than doubled our networking purchase commitments quarter-over-quarter. Within networking, Campus & Branch revenue grew 8% on a normalized basis. Routing revenue growth accelerated to 23% as we benefit from increasing demand for our on- and off-ramp AI network infrastructure. Security grew 12%, while data center networking revenue declined 6% due to shipment timing driven by supply constraints.

Order momentum was much stronger across most product categories with data center switching and routing, up high double digits and Campus & Branch up low teens. We remain focused on improving order conversions to drive faster top line growth and greater scale. Across customer verticals, enterprise revenue grew 12% and service provider grew 5% on a normalized basis. Enterprise growth was driven by strong demand from large global accounts prioritizing network modernization across Campus & Branch and data center switching. Networking operating margin of 22% was in line with guidance, reflecting disciplined execution and the early realization of Juniper synergies, partially offset by higher variable compensation.

Moving to cloud and AI. We delivered fiscal Q3 revenue of $9 billion, up 25%, exceeding our outlook, reflecting strength in traditional servers as higher average selling prices drove server revenue to an all-time high. Our disciplined pricing and increased scale drove operating profit above $1.5 billion. We were pleased to see operating profit growth accelerate, up 61% sequentially and triple digits year-over-year. Operating margin of 17% was up 460 basis points sequentially, demonstrating our ability to scale our business profitably. Server revenue growth of 35% accelerated sequentially as strong ASP growth in traditional servers offset supply-constrained unit volumes. Orders increased strong double digits year-over-year, reflecting robust demand from large enterprise, sovereign and cloud providers.

Our supplier agreements now multiyear, in some cases, ensure us the capacity allocations we need to reduce lead times, improve at that log conversion and drive higher new order growth, supported by our historically highest level of purchase commitments. We see enterprises increasingly moving from AI pilots to production deployments using traditional servers for genic AI workloads and inferencing. Examples include a global financial services firm, leveraging AI for market analytics and trading insights and a large retail customer deploying on-prem agentic AI workloads to lower public cloud AI token costs. As evidence of this strong growth, we are pleased to report that after quarter end, HPE was awarded a multibillion-dollar server deal with a hyperscaler customer specifically designed for inferencing, supporting our view that demand for inferencing and agentic AI workloads is building.

AI systems orders of $2.4 billion increased over 30% sequentially, reflecting broad-based demand across customer segments. Enterprise demand more than doubled, reflecting increasing overall infrastructure spending as AI initiatives have become board-level priorities. Our AI Systems backlog increased 14% sequentially to a new high, and our pipeline remains multiples of our backlog. AI Systems revenue for the quarter was almost $1.6 billion. We expect AI Systems revenue to improve sequentially in Q4 given timing of backlog conversion.

Storage revenue increased 10%, driven by strong order growth with higher ASPs at a favorable mixture towards higher-value owned IP and private cloud. PCAI orders increased triple digits in Q3 as customers are adopting our AI factory platform to support agent AI and inferencing initiatives. Alletra MP orders and revenue increased strong double digits year-over-year. We see robust growth potential for our X 10(k) object and file system, broadening our AI solutions portfolio to address the rapidly expanding unstructured data market. And finally, financial service revenue was roughly flat year-over-year, and the business continued to generate a return on equity exceeding 20%.

Turning to our integration and transformation initiatives. We are making strong progress in building a more efficient company as we are running ahead of plan on multiple projects to lower our cost of sales and operating expenses. Juniper synergies capture remains on track to achieve our $600 million annual run rate savings target by the end of FY '28, with integration costs tracking better than planned. Last quarter, we highlighted the growing contribution of AI-enabled process simplification within Catalyst. Since then, we have expanded both our AI and operational simplification efforts across the enterprise. HPE is now deploying an internal agentic AI platform built on our own private cloud AI, open source and open weight models, leveraging intelligent routing that sends each workload requests to the most cost-effective AI model.

According to our own internal analysis, our PCI offering can reduce token costs versus the public cloud by up to 60%. Routine task stay on-premise, while frontier models are reserved for the most complex work.

Moving to cash. We delivered operating cash flow of $1.6 billion. Free cash flow totaled $958 million in Q3. As a result, we are raising our free cash flow target to at least $3.75 billion for FY '26. Our cash conversion cycle improved by 1 day from Q2, driven primarily by a decrease in days receivable due to more favorable billings linearity within the quarter, along with stronger collections. This was offset by an increase in days of inventory due to higher purchases in anticipation of future shipments. Inventory ended the quarter at $11.8 billion, up year-over-year and sequentially, reflecting higher commodity costs and targeted purchases to support increased orders and increased backlog. In Q3, we returned $324 million to common shareholders, including $189 million in common dividends and $135 million via share repurchases. We received gross proceeds of approximately $1.4 billion after closing our H3C transactions and use cash on hand to retire our term loan. Consequently, we exited Q3 with a net leverage ratio of 1.8x, below our target of 2x.

We completed the sale of our Telco Solutions business last month and intend to retire $1.25 billion of notes maturing later this month. We plan to return at least 75% of our free cash flow to shareholders in Q4.

Turning to guidance. We are increasing our outlook on the strength of our Q3 results and confidence in the durability in demand. We expect Q4 revenue to be between $13.9 billion and $14.8 billion, reflecting continued strong demand across both segments. We expect networking revenue to grow 11% to 13%, driven by order strength and improved supply chain conversion. We expect networking operating margin to improve modestly quarter-over-quarter driven by top line growth and Juniper synergies.

In cloud and AI, we expect revenue to grow 60% to 72%, reflecting sustained demand, higher ASPs and traditional servers and greater AI revenue conversion. We expect operating margin to moderate sequentially to a mid-teens rate. We expect Q4 total operating expenses to decrease sequentially by a low single digit due to lower variable compensation expense and increased catalyst transformation efficiencies and Juniper synergy capture. We expect our operating margin rate to decline sequentially driven primarily by a higher mix of AI systems in cloud and AI and pricing. As a result, we expect EPS between $1.20 at $1.30, a GAAP EPS between $1.12 and $1.22.

Based on our Q3 results and Q4 outlook, we are raising our FY '26 EPS guidance range to $3.75 to $3.85. We are also raising our GAAP EPS range to $2.93 and $3.03. We now expect FY '26 free cash flow of at least $3.75 billion. Given the demand strength and sizable backlog we saw at the end of Q3, combined with some large deals we signed post quarter close, we are updating our fiscal '27 framework and now expect consolidated revenues to grow 13% to 17%. Networking revenue growth of 14% to 17%. Cloud and AI revenue growth of 14% to 18%. Company operating profit growth of 14% to 18%. Company operating margin of 14% to 15%, supported by a modest decline in operating expense.

Networking operating margin in the mid- to high 20% range, clouded AI operating margin of approximately 13%. EPS of $4.40 to $4.60, which implies growth of 16% to 20% versus the midpoint of our FY '26 EPS outlook and free cash flow of at least $5 billion. Importantly, this framework builds on our higher FY '26 guidance, pointing to a significant improvement in our fiscal 2027 outlook.

In closing, Q3 was an exceptional quarter for HPE. We generated strong financial results, raised our fiscal '26 and fiscal '27 commitments and achieved our leverage target more than a year ahead of our original plan. Demand remains ahead of revenue, and our backlog is a record. At our Juniper integration and Catalyst initiatives are delivering ahead of our FY '26 plan. As we head into the final quarter of fiscal '26 and look ahead to fiscal '27, we are executing from a position of strength. With durable demand, strong margins and the operational discipline to sustain both.

With that, I'll turn the call back to the operator to begin Q&A.

Operator

[Operator Instructions] And our first question for today will come from Katherine Murphy with Goldman Sachs. [Operator Instructions]

分析师问答

Katherine Campagna

It was encouraging to see the momentum across the total portfolio, the record orders that you mentioned in the quarter as well as the raised fiscal '27 outlook for 13% to 17% growth. First, can you talk about what's giving you confidence that the current demand represents a sustained infrastructure cycle rather than customers pulling forward spend? And then as a follow-up, can you quantify how much of the raised fiscal '27 outlook is related to the new hyperscale inference and Oracle deals that you highlighted versus improved outlook within the remaining business.

Antonio Neri

Well, thanks, Kathy, and good afternoon. Look, our guide is informed by what we see in the market, and the market is telling us the demand continues to be exceptionally strong. So there continue to be large build-out for AI cloud. And obviously, we participate that in a very disciplined approach. Although networking, we continue to see significant demand for our routers and data center switches, which you saw we had record-breaking orders of $700 million this particular quarter, and we expect that to end between $2.5 billion and $3 billion for the year. And when I think about 2027, in our guide, we have not included the AMD Helios opportunity at all, which is going to start ramping sometime end of this calendar year in 2027. So demand is exceptionally strong. And then on the cloud and AI will give us the confidence is the acceleration in the enterprise. The enterprise clearly has hit an inflection point. And that inflection point is driven by the deployment of agentic AI and AI inferencing. And what we see that is because the number of use cases. And we see that ourselves. Just to give a perspective, we have more than 1,200 use cases in our company, 300-plus in production. And we continue to learn how to do that and accelerate the pace. We see that now in the broader enterprise market across multiple verticals. And the reality, that's going to favor our traditional server and storage business in our private cloud stack because they don't need huge amount of GPUs or even CPUs for that matter. What they need is a very tight capital infrastructure that ultimately brokers the cost of tokens that ultimately allows them to do what they need to do. So the number of tokens on-premise is growing very, very rapidly. So that's what informs us on the durability of this demand. And we see that in our pipeline, because ultimately, you guide yourself about the pipeline and how much of the pipeline you could convert first in orders and eventually through revenue. So that's what gives us the confidence to provide the guide that we guided for 2027. Marie?

Marie Myers

I think, yes. So just in terms of the guide itself, as you know, we guided to 13% to 17% of revenue for the total company. In terms of networking, the Oracle deal plus the core, the beginning of the Oracle deal is in the [ 14% to 17% ] that we guided for the networking growth. And in terms of the hyperscaler deal, some of that as well is included in the cloud and AI, which we guided to [ 14% to 18%. ] So that's how you should be thinking about the revenue. Once again, this puts and takes in all -- there is more AI revenue in cloud and AI as well as you get into '27, so just bear that in mind.

Operator

The next question will come from Amit Daryani with Evercore.

Amit Daryanani

Congrats on some fairly impressive numbers over here. Antonio, I wanted to just ask on networking though, the organic growth of 10% looks a little light relative to what I think your peers are seeing right now, I think, relative to what you perhaps expected. But your orders at up 36% is really strong. Maybe just talk about what's driving the gap over here? And how should revenues begin to catch up in orders? If you just spend a little bit of time on that, that would be helpful. And then I didn't hear you folks talk about the Oracle announcement a lot. Maybe just help us appreciate what are you providing them? Is it scale out, scale across, just provide a little bit more color on that deal because it seems like a fairly important thing on the networking side, at least.

Antonio Neri

Sure, Amit. The order momentum is super strong. In fact, as we said in our prepared remarks, our orders are growing 3.5x faster than the revenue. And so what it has limited us is the availability of supply. And we expect that supply to become more aligned to our order bookings as we go forward. Starting Q4, where you can see where we go on the revenue side from 10% in Q3 to 11% to 13% in Q4 and then eventually to 14% to 17% in the full 2027 year. And so that's our focus is really on the supply availability. That's why Marie said that we have doubled the number of commitments in terms of inventory. And we are working with our suppliers through that. And the reality is that we will see continued orders ahead of revenues, but we expect that to kind of close a little bit as we go forward. So we don't -- we expect an asset ratio of revenue as we go forward, but supply will continue to be the constraint. Now within that, Marie talked about core. So core for us is the Campus & Branch, which always has represented more than 50% this quarter was probably 50% of it. And that had double-digit order growth, low double-digit order growth, but we posted record revenue, and we expect that to continue to improve as we go forward because we have a terrific value proposition with our self-driving networks, and the versatility of the both Mist and Aruba Center platform. And then on the Oracle side of the equation, is an expansion of what Juniper used to do. But now we are doing at gigawatt scale and it's going to be a very set number of deployments on a global basis, and they're going to use both our QFX switching products, which is based on the Broadcom Tomahawk 6 and our software and our AI Ops. So think about that as a scale out. And then our scale across, which is our PTX routing platform, which uses our own silicon, which is a major differentiation for scalability, which is our Express 5 silicon, which we designed now a couple of years ago. So on a combined basis, this is a multi-gigawatt on a multiyear basis.

Operator

Your next question will come from Aaron Rakers with Wells Fargo.

Aaron Rakers

Congratulations on the strong results. On the traditional server side, I guess the question I have is, I think you talked about a lot of the growth being driven by the ability to pass through pricing relative to unit growth. So I guess my question is, as we think about AI moving into the enterprise environments more prolifically, how would you characterize the installed base and the upgrade opportunity that you're seeing associated with that? And should we start to think about unit growth accelerating on top of the ASP pass-through? And then secondarily to that, the hyperscale deal, I think in the past, HPE has been pretty clear of you'll be opportunistic on AI opportunities and maybe some of the larger hyperscale. Has this changed strategically at all? Are you going after some additional hyperscale deals more actively going forward?

Antonio Neri

Thank you, Aaron. Maybe I'll start with the latter because it's a very important use case. It is a hyperscaler customer, but think about them as an enterprise customer who is going to use our AI inferencing for their own internal usage. So our strategy has not changed from a selling a large amount of infrastructure for them to serve like it used to be in the past, the cloud business. This is about a multibillion-dollar AI inferencing for their own internal usage as an enterprise customer. It just happened to be they are labeled as a hyperscaler customer, okay? And so that's one takeaway. Second is that look, units will modulate as supply becomes available, right? And so we -- as Marie said in her prepared remarks, we were obviously -- we still, like everybody else, working through the supply availability. But what we are very excited about is that the acceleration of traditional service and storage, by the way, in private cloud because some customers go server only, some go with server attached to -- storage attached to servers and some are using the full stack like a private cloud AI, which in many ways, the AI factory that we co-engineer with NVIDIA. And in that case, right, it's about the growing of the AI deployment on-premise. And so over time, right, it's going to become how large those deployments come. And ultimately, whether you serve only or you go private cloud, that will drive units, but it also would come down to the conversion of the units based on the supply availability as we navigate 2027. But right now, as we said, right, we expect continued exceptional demand into Q4 and 2027.

Operator

Your next question will come from Joseph Cardoso with JPMorgan.

Joseph Cardoso

Congrats as well. Maybe if I could, I think, Antonio, you mentioned that you're not embedding the Helios opportunity into the fiscal '27 outlook. Can you just touch on the rationale behind that decision and what's keeping you on the sidelines from introducing that into the framework. And any thoughts on how we should think about the magnitude of upside that you could introduce to the networking revenue and margin outlook when and if that gets introduced into the framework?

Antonio Neri

Yes. Now thank you for the question. Well, I mean, we are working very closely with our partner, A&D. And we expect that infrastructure to be available for ordering later in this calendar year, and we're working together on a very large pipeline, which obviously this infrastructure is designed for large AI deployment at scale, particularly for training and then obviously, it can be used as well for inferencing. But these are a concentrated number of customers in the end that they need that level of infrastructure, not different they're using today with NVIDIA NBLs 72 and 144 of [indiscernible]. We felt that we wanted to see a little bit more as the schedule firm up and then eventually start deploying these capabilities. And then as we go through the sub single quarters, we're going to share more about how that's happening. But the opportunity is pretty massive. When you look at the size of that deployment can be as a market okay, not HPE, tens of billions of dollars, okay, tens of billions of dollars. The difference this time is that, for us, the scale-up tray switches or HP Juniper. And let me be clear, we are going to sell HP Juniper scale-up switches beyond just embedded in HPE Helios rack. So we can sell it to anyone for that matter because obviously, customers will want sometimes different compute vendors, which is totally fine. But that opportunity is in the margins of the tray switch and the opportunity to see broadly beyond the HPE as a partner with AMD as we go forward. So once we see a little bit more of that, Marie now will share more. But this is not in the 14% to 17% growth that we just shared with you as a partner networking only.

Marie Myers

And I would just add that once we get to the end of Q4, we'll give a fulsome guide for '27 as well.

Antonio Neri

Yes.

Operator

The next question will come from Wamsi Mohan with Bank of America.

Wamsi Mohan

I was wondering if you could share any more details around your $3.5 billion inferencing deal that you signed. What exactly is part of that? And can you talk a little bit about the economics around this? And are you changing your approach to incremental hyperscale opportunities?

Antonio Neri

Yes. So obviously, we can't talk about the customer, but it's a hyperscaler customer, but is acting, as I said, to Aaron as an enterprise. We are not selling 1 were used to refer as a Tier 1 infrastructure. You recall that during the cloud days, we are now selling that type of infrastructure. We are selling traditional servers for AI inferencing that they will use for their own internal usage.

Operator

The next question will come from Asiya Merchant with Citi.

Asiya Merchant

Can [indiscernible] down a little bit on supply constraints. Where do you see them most acute right now? And kind of your expectations on the supply constraints easing or how you're thinking about your agreements long-term agreements that you've signed to source the supply.

Antonio Neri

Yes. Thank you for the question. The supply constraints, generally speaking, continue to be the same, right? So obviously, on the commodity side, DDR5 is a great example of it. The DDR4 for the older generation, NAND in the flash drive space. Those have been consistent themes now for 3 quarters since the beginning of 2026. And then there is an other set of parts underneath that they are constrained by wafer capacity. And so we expect that to continue to be the case because ultimately, you have to solve two problems. One is clean room capacity to turn wafer into more available supply that going to -- that should improve some in 2027 because we know our partners continue to invest in clean room capacity, but ultimately, structurally, this will be solved with wafer capacity because in the end, you need the wafers to turn parts into actual supply of products. And so that's the challenge we're all navigating through. And the wafer capacity affects other parts, right? But in the memory space, you also have another trend underneath that obviously is driven by the technology shift. We had DDR4 to DDR5, that's understood, but then you have traditional DRAM moving to HPM. And that HBM demand is super high because it's driven by the GPU and the better memory that comes with it. So this is why you have to look at this wafer capacity, clean room capacity and then eventually the mix of what type of memory will be used and demanded as we go forward. Now in the traditional server, we use DRAM. We don't use HBM. And so that's where we are focused very extensively. Once you buy a rack scale architecture, you come with HBMs and therefore, once you get that server tray with the GPUs, the memory comes with it. So this is where we need to navigate through, but my expectation personally after seeing the exceptional demand that we see in the market and talking with our suppliers, some of them we signed already multiyear LTA agreements to lock our capacity. We decide how to use that capacity. Then it tells me this is going to last for a longer period of time, which obviously will have consequences on cost and pricing. But so far, I think HP has been very effective in managing that process.

Operator

The next question will come from Erik Woodring with Morgan Stanley.

Erik Woodring

Congrats on the nice quarter here. Marie, your prepared remarks on -- you mentioned gross margins, and you mentioned a normalization in traditional server margins, I think, looking forward. Can you maybe just elaborate a bit on what that means? Like why would you see normalization in server margins if demand is as strong as you're referencing in your unit trajectory should seemingly improve as you get better supply? Like is this -- have you benefited from low-cost inventory now that's starting to uptick in your billing materials. I'm just trying to understand your comment on exactly what you're trying to message there.

Marie Myers

Yes. No worries, Erik, and good afternoon. So maybe I'll just start up by giving you some context on the quarter, what drove those margins and then how we think about them going into Q4 and into '27. So I would think about Q3 more as a confluence of everything coming together at once. Obviously, you saw the impact of strong revenue scale, and that played through in terms of leverage higher gross margins. We talked about our disciplined pricing. You heard Antonio talk about how we've been very diligent around pricing in this constrained component environment Don't forget we've also got the benefits of programs like catalysts that have been flowing through as a put and take. And then there was a mix of deals in the quarter that also impacted and really frankly benefited us in terms of our Q3 rates on what I'd say with respect to servers. As you get forward and you look forward into Q4 and then this does carry forward into the guide that we gave into '27. Bear in mind that the mix of deals, specifically in AI will ship. So we do expect to ship more AI revenue, specifically in Q4, and you can see that our in number, inventory number went up. So we're positioning ourselves to ship some larger AI transactions, and we expect to have a bigger mix of that also into '27. And then I just double down, it's actually the mix of deals even inside of traditional server will also moderate as we go into Q4 and into '27. So that's how I'd be thinking about the margins. Obviously, we're pleased with the guide that we've given, but I think at this point, we had a great quarter in terms of a confluence of all the factors coming together.

Operator

The next question will come from Tim Long with Barclays.

Timothy Long

A two-parter, if I could, on AI networking side. First, nice win with Oracle. As you mentioned, had been a pretty big Juniper customer. So just curious if that win can propel any other use as a reference design or reference case for other either hyperscalers or neoclouds, there's obviously a lot of new networking opportunities out there. So I'm curious if you think that larger, more profile, AI win can do that? And second, Antonio, you mentioned the scale across with the custom silicon. I'm curious what you guys are hearing on the importance of having that customer silicon. Do you think that was important for the wind? And similarly, is that something that can help drive even more scale across as that's becoming more important for the AI companies?

Antonio Neri

Yes, Tim, thank you. The answer is yes and yes. I mean, yes, because obviously, it proves on the first part of your question, that we have a scalable set of products that deliver the performance with the AI capabilities that now everybody is looking for to drive these self-driving kind of operations. And we have embedded that across the entire portfolio, not just in the Campus & Branch, but also if you look at our routers are amazing what they can do in optimizing the bandwidth using AI. But also, we were first time to market with a 1.6-terabit. And time to market here is a very important aspect of competing and winning in the market. So Rami and I, spent a lot of time with the team how we continue to stay ahead of the curve and be first time to market with these latest technologies. So we were definitely first time to market Juniper was with a 1.6 terabit in air cooled. And we were the first 1.6 time to market with the direct liquid cooling. And then on the route -- and so we hope that, that's going to drive a significant amount of interest, and we have a lot of conversations with customers, right, to leverage this portfolio. On the routing side, look, it's very hard to do what our silicon does. There's only 2, 3 players who have done this at massive scale. And it's a source of differentiation. What our express silicon does for the routing is unique. And if you think about the PTX, I'll give this example, right, perhaps not in the eye space. But if you take the latest PTX product, which is 3/4 of a rack and you take New York and London, all 60 million people watching a Netflix movie concurrently on the platform. The platform can manage it. Think about the scale, right, that these products can do. And that's very hard to do. So that's why as these gigawatts and gigawatts of infrastructure gets deployed, which we think by the end of the decade will be over 270 gigawatts. You have to connect all of them. And therefore, you need a -- at the end of that pipe, you need a router with that level of capabilities.

Operator

The next question will come from David Vogt with UBS.

David Vogt

Maybe a combo for Antonio, Marie. So I think Antonio, if I think about your '27 outlook, you're taking the revenue up by about $4 billion relative to where we were 90 days ago. Can you kind of dig in on the supply chain? I know you talked a little bit about it before, but what improved on the margin? Was it just securing more purchase commitments what gives you more confidence that you have enough supply chain relative to 90 days ago to kind of hit that target? And then Marie, for you, same kind of question. You're taking that number up by about $4 billion, and it looks like the free cash flow drop through is pretty impressive, incrementally $500 million flows through at least, which is better than your current conversion on the business. Can you help us understand kind of what's going on with the free cash flow conversion from the guidance raise?

Antonio Neri

So yes, the first part of your question, the answer is yes because obviously, we put numbers out there if we have the ability to fulfill it, and that came through the work our supply chain team have done to secure these multiyear long-term agreements that locks the capacity. And obviously, every 90 days, we can actually adjust what type of usage in the capacity within that capacity, we want to get out of it. And so your math is absolutely in the range, and that's why we are confident in this guide because at one end, you have the demand for it, and then you have the supply to fulfill it. And that's why this is a durable profitable growth. And on the cash flow, Marie?

Marie Myers

Yes. No, look, first of all say, look, really pleased with the guide we gave of at least $5 billion, which is up 33% year-on-year. And as you correctly pointed out, one of the biggest drivers of that improvement in the rate is really the fact that we've got a lot less restructuring as we go into '27. Just remember that the programs that we had like Catalyst and the Juniper synergy programs, really we had the sort of, I'd say, the brunt of the restructuring in this year in '26. So as we get into '27, we start to bleed that down, and it will be a bit of a tail left on the Juniper synergy plan, which will honestly bleed off by the sort of end of Q4 of next year.

Antonio Neri

I think the other thing, Marie, that's important to understand is that as we accelerate the growth in networking, which obviously 14% to 17% is an acceleration compared to 2026. The working capital demand in networking is significant lower because it's a faster turn to revenue once you get the inventory on hand.

Operator

The next question will come from Mark Newman with Bernstein.

Mark Newman

Digging a bit more into the service side. You reported server revenue up 35% year-on-year. Obviously, you've got some AI servers in there. So I think if you take that out, it implies that traditional servers growing a bit faster than that number. Just wondered if you could -- and you said orders for traditional servers up 75% year-over-year. I wondered if you could clarify for us like how much of this growth is higher ASPs and richer configurations, which you mentioned on Slide 8 versus unit growth. Is there any significant unit growth in terms of units of CPU cores or any kind of metric like that? Or is this exclusively pricing and configuration? And related to that, the orders being stronger growth than the revenue, can we ascertain from that that you're significantly supply constrained and should we -- how long would that supply constraint last? I'm just wondering in terms of projecting out like should we see further acceleration of server growth from here as supply constraint alleviate? Or is that a supply constraint going to remain at similar levels going forward?

Antonio Neri

Yes, you put a lot in that question, but I'm going to simplify it for you a little bit. Look, we expect in Q4 units to strengthen because of what we see in the market. And obviously, in 2026, the unit has been constrained by the supply availability, which means a lot of the growth came through the ASPs, but as we go into Q4, we expect units to strengthen. And a lot of that will be on the back of the AI inferencing in agentic AI that we see. Supply will continue to be constrained, which means we're going to continue to run into high backlog as we go forward. But to the question that was asked earlier on, we factor that in, in our guide because our guide reflects what we believe the supply availability against the backlog and the demand will be. So I will stay focused on the guide. I will stay focused on the fact that supply will continue to stay constrained, but the demand will continue to be exceptionally high. And so we expect the cloud and AI segment to grow 14% to 18% on revenue. And that's a very strong growth, and it will continue to be led by traditional servers, higher conversion on AI systems as we go forward, particularly in Q4. And then ultimately, the storage business because, obviously, the storage business helps on the profitability side because of the margin structure. But look, as we said in our remarks, storage grew twice as fast as the revenue that we posted in the quarter.

Marie Myers

Yes. And I'd just add, Mark, that we actually -- it was a raise on cloud and AI revenue actually for '27 to get to the 14% to 18%. So I think that just illustrates the strength of the demand that we're seeing out there.

Shannon Cross

Operator, we'll take our final question.

Operator

Our final question will come from Matt Niknam with Truist.

Matthew Niknam

I'll echo the congrats on the great results. Maybe more of a high-level question. I'm wondering, Antonio, if you're seeing any incremental hesitation or pushback from customers with regards to demand appetite, just in light of some of the bigger pricing actions aimed at offsetting higher memory costs. And maybe on a related note, if you can speak to where incremental budget to invest in IT infrastructure and HP products are coming from at some of your larger customers?

Antonio Neri

Sure. No, we don't see hesitation I will say at the beginning of this hyper cycle on the cost, obviously, there were a little bit, I mean, shocked, and they're trying to navigate through the timing by focusing on understanding the trends and looking at the spot market and the like. Once they understood that, I understood that, particularly in AI, you need to go faster they figured out, look, waiting is not an option, but they are getting smarter about where to land their budgets, and how to optimize for these tuck-in economics, which Marie talked about. Look, when you do it on-premise, and we do that ourselves and we share the number, we can see up to 60% cost benefits on a tuck-in basis. And so no, I don't see hesitation on this point in time, and that's why demand continued to be exceptionally strong. That's very clear. In terms of budget, look, budgets overall are going up. Look, in our case, we can talk about it. Of course, there is prioritization within the budget to replace that all the infrastructure to invest more in AI is a balanced approach. But in our case, we are growing the budget to consume more tokens because we are very aggressive in deploying AI as a part of the catalyst transformation. Obviously, we do it with governance, rigor, return on invested capital and all the things. But in the end, it's an add-on, okay? It's not the substruction of something else. So I was talking to a large customer yesterday, which is in the financial sector. And he told me, yes, we are going all in, and now we have done the math, and we believe it will be better suited for us to build an AI factory on-premise so that we can improve the agility of deploying AI with the cost and controls, particularly in financial services with the compliance, right, that regulates that vertical. So we see that momentum continue. And I believe 2027 is going to be even stronger for enterprise because they become more confident in what they are doing and one win takes -- leads to another way, right, on how this has been successful. Because in the end, business process transformation, it's workflow transformation. It's not just technology for the sake of technology.

Shannon Cross

Antonio, would you like to...

Antonio Neri

Yes. No. Thank you for your time. I know you have a lot of earnings to cover I will remind you of the network in Investor Day, please attend if you can. We're going to share with Rami, our view of the future. Clearly, super excited about the Juniper acquisition. It has been a huge success. And we're just at the beginning. You saw some of the wins that we just announced. The runway ahead of us is enormous, whether it's new wins to Tim's question early on or with further customers or the Helios opportunity. The fact that everybody was concerned about integration, this was executed very thoughtfully. And the fact we're growing 3.5x faster than revenue shows you that we have the right portfolio at the right time with the right talent. And then in the cloud AI, I think we are delivering operating leverage. I mean, the execution there has been excellent. But our strategy is very intentional. We are leading with networking. We are at the core becoming a networking company. And the rest of the portfolio is there to serve the customer needs by driving the profitability and ultimately generating more cash, which has been a huge success so far, and it will be a bigger success in 2027. So thank you for your time today.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.