HPE Raises 2027 Outlook as AI Demand Spurs 42% Order Growth

Hewlett Packard Enterprise raised its fiscal 2027 financial guidance and reported record margins at Citi's 2026 Global TMT Conference, driven by accelerating artificial intelligence infrastructure orders and an ahead-of-schedule debt reduction.

"We posted revenue of 13%-17% in terms of growth, but we posted EPS growth of 16%-20%. So you're seeing earnings power actually outperform revenue," said Marie Myers, Chief Financial Officer, Hewlett Packard Enterprise, in a statement at the event.

Record Margins and Surging Order Growth

During the third quarter of fiscal 2026, Hewlett Packard Enterprise achieved a record gross margin of 40%. Normalized orders across the business expanded by 42% compared to the same period in the prior year.

Growth was led by specific enterprise technology segments:

• Cloud and AI orders surged between 70% and 76% year over year.
• Networking orders increased by 36% year over year.

These gains reflect enterprise spending shifts toward high-performance computing clusters required to train and run large-scale machine learning models. The acceleration also benefits from the integration of Juniper Networks following regulatory clearances and operational alignment.

Upgraded Fiscal 2027 Guidance

Reflecting the order momentum, management updated its multi-year financial targets for fiscal 2027. The company now projects revenue growth of 13% to 17% and earnings per share growth of 16% to 20%.

Additionally, HPE expects annual free cash flow to exceed $5 billion. The improved cash generation stems from higher-margin hardware sales and operational efficiencies realized during the Juniper integration process.

Major Contract Wins and Leverage Milestones

The conference disclosures highlighted commercial traction for HPE's AI portfolio. The company secured a $3.5 billion inference deal with a large enterprise customer, alongside a multi-year, gigawatt-scale agreement with Oracle to deploy specialized AI infrastructure.

On the balance sheet, HPE reported that its leverage ratio fell to 1.8x in the third quarter of 2026, hitting its internal target ahead of schedule. Backed by this deleveraging, the company plans to return at least 75% of its free cash flow to shareholders through dividends and share repurchases beginning in the fourth quarter.