Hewlett Packard Enterprise (HPE) delivered a record fiscal third quarter as strong demand for AI infrastructure, networking and enterprise computing lifted revenue and profitability. The results reinforce a broader technology-industry trend in which corporate and hyperscale customers are increasing infrastructure spending to support expanding artificial intelligence workloads.

Record Revenue Signals Strong Enterprise Infrastructure Demand

HPE generated $12.2 billion in third-quarter revenue, an increase of 34% from the prior-year period and slightly above the $11.91 billion estimate shown in the earnings figures. Adjusted earnings per share reached $1.11, compared with expectations of $0.93, while non-GAAP gross margin expanded to 40.4%, an improvement of 1,050 basis points year over year.

Non-GAAP operating margin also reached 16.2%, up 770 basis points from the comparable period. The combination of stronger revenue and wider margins indicates that HPE is capturing greater operating leverage as demand increases across its infrastructure portfolio.

The company’s networking business remained a particularly important growth engine. HPE’s third-quarter Networking revenue reached approximately $2.9 billion, representing 74.9% year-over-year growth. The performance follows the integration of Juniper Networks into HPE’s portfolio and highlights the growing importance of networking infrastructure as enterprises and data centers expand their AI capabilities.

AI and Networking Strengthen HPE’s Growth Profile

HPE’s Cloud & AI segment generated $9.0 billion in revenue during the quarter, increasing 25.4% year over year. The company has increasingly positioned AI infrastructure as a multi-year growth driver, with demand extending beyond processors and servers into networking, storage and the broader systems required to operate AI workloads.

This positioning is significant because AI infrastructure requires high-performance networking to move large volumes of data between computing systems. HPE’s strategy of combining its server and AI capabilities with the networking portfolio acquired through Juniper gives the company a broader infrastructure offering as customers build increasingly complex AI environments.

Management also pointed to a record order backlog, supporting the view that current demand is not limited to short-term project spending. HPE has been expanding its AI-native networking capabilities and integrating networking, cloud and AI infrastructure into a more unified enterprise offering, a strategy that could strengthen its competitive position as AI adoption broadens.

Higher Guidance Raises the Bar for Fiscal 2027

HPE raised its fiscal 2026 outlook, projecting revenue growth of 34% to 37% and adjusted EPS of $3.75 to $3.85, compared with the $3.43 estimate cited in the earnings figures. The company also expects networking revenue growth of 73% to 74% and free cash flow of at least $3.75 billion.

For fiscal 2027, HPE introduced a growth framework calling for 13% to 17% revenue growth, non-GAAP EPS growth of 16% to 20% and a non-GAAP operating margin of 14% to 15%. The company expects free cash flow of at least $5 billion, suggesting that management anticipates continued growth while maintaining substantial cash-generation capacity.

The outlook nevertheless raises the importance of execution. HPE will need to sustain elevated AI and networking demand while managing supply constraints, component costs and the integration of its expanded networking portfolio. The company has previously identified supply conditions as an important consideration in its infrastructure business, making order conversion and margin performance key indicators for the coming quarters.

Going forward, investors will be watching whether the record backlog translates into sustained revenue growth and whether AI infrastructure remains a durable source of demand rather than a temporary acceleration in enterprise spending. The pace of networking growth, Cloud & AI margins, free cash flow and progress toward the fiscal 2027 targets will provide important signals on whether HPE can convert the current AI infrastructure cycle into longer-term profitable expansion.