Hewlett Packard Enterprise Shares Drop 9% as Soft AI Server Outlook Weighs on Guidance

Hewlett Packard Enterprise (NYSE: HPE) shares declined more than 9% intra-day on Friday after the company issued a weaker-than-expected revenue forecast for the current quarter, citing softness in its AI server and hybrid cloud businesses as customers pushed orders into the back half of next year.

In its fiscal fourth quarter, HPE reported adjusted earnings of $0.62 per share, slightly higher than the prior-year period and above its guidance range of $0.56 to $0.60. Revenue increased 14% year over year to $9.7 billion but missed analyst expectations of $9.9 billion. The shortfall came as server sales dropped 5% to $4.46 billion and hybrid cloud revenue declined 12% to $1.41 billion.

The company noted that its AI server business—built around cutting-edge Nvidia chips—faced delays as customers shifted deployments. Meanwhile, networking revenue surged 150% to $2.8 billion, boosted by HPE's recent acquisition of Juniper Networks.

Adjusted gross margin expanded sharply, improving 550 basis points to 36.4%.

For its fiscal first quarter, HPE projected adjusted EPS of $0.57 to $0.61 on revenue of $9.0 billion to $9.4 billion, below Wall Street estimates of $9.91 billion in sales but slightly above expectations for earnings per share of $0.54.

HPE also raised its full-year fiscal 2026 outlook, guiding to adjusted diluted EPS between $2.25 and $2.45 and lifting the midpoint of its free cash flow forecast to $1.7 billion to $2.0 billion.