Dive Brief:
- Hewlett Packard Enterprise saw customer demand boom during its Q2 2026, leading to $10.7 billion in revenue, up 40% year over year. HPE’s cloud and AI revenue segment represented $7.7 billion of total revenue, an increase of 22.9% from the same period last year.
- HPE credited the jump to increased customer investments in agentic and AI inference during the quarter, as well as higher demand and investment in compute infrastructure modernization, unstructured data storage and private cloud adoption for AI, CEO Antonio Neri told investors during the company's earnings call Monday.
- “Demand was even stronger than revenue growth,” Neri said during the call. “Orders more than doubled, significantly outpacing revenue, resulting in a record company backlog.”
Dive Insight:
HPE’s earnings reflect enterprises’ continued efforts to lock down compute and invest in infrastructure to support AI workloads despite rising costs. The bump also shows the results of the company's 2025 acquisition of Juniper Networks.
The provider raised its storage and server product prices multiple times throughout November, December and January due to ongoing chip shortages. Still, HPE said it experienced heightened customer demand during its second quarter.
HPE’s traditional server orders increased triple digits due to customer investments in compute infrastructure modernization and AI inference, Neri said.
“Customers trust us with their most critical networking infrastructure decisions as they expand their digital initiatives and AI investments,” Neri told investors during the call, pointing to Lowe’s as an example. The retail company chose HPE to deliver the network foundation for a technology transformation supporting AI-enabled operations, Neri said.
The company also reported strong demand for its private cloud services, entering its third quarter with a $5.9 billion backlog composed primarily of enterprise and sovereign orders. Enterprises “want the flexibility of choosing multiple AI models with the governance and control of on premises,” Neri said.
Rising interest in sovereign AI — the ability for an organization to control its own AI ecosystem — is a boon for HPE, said Dan O’Brien, president and COO of The Futurum Group.
“Increased enterprise adoption and demand for sovereign AI are key market trends playing to HPE’s competitive strengths,” O’Brien told CIO Dive in an email.
O’Brien added that the company’s Juniper Networks acquisition has been a game-changer for HPE in its networking revenue segment, which was up 148.2% year over year. HPE acquired the networking company for $14 billion in a transaction that closed last year. The U.S. Department of Justice initially sued to block the merger between the market competitors, citing antitrust concerns.
HPE isn’t the only company benefitting from enterprises’ infrastructure investments.
Dell Technologies’ revenue skyrocketed 88% year over year in the first quarter of its fiscal 2027, which the company reported last week. The company saw an increase in both traditional and AI-optimized server revenue, propelled by enterprise investments in infrastructure and compute.
