HPE Surprises Wall Street With 2026 Forecast

HPE hosted its Securities Analyst meeting on Wednesday. (Dreamstime)

Hewlett Packard Enterprise offered weaker-than-expecred financial guidance Wednesday as the company transitions its server business toward a world focused on artificial intelligence.

During an analyst meeting at the New York Stock Exchange Wednesday, the company said it expects fiscal 2026 adjusted earnings to be between $2.20 a share and $2.40 a share, with revenue growing between 5% and 10%. Analysts surveyed by FactSet have been forecasting 2026 adjusted earnings of $2.43 a share with revenue growth of 17%.

HPE said its growth rates are adjusted for its recent purchase of Juniper Networks, which closed in July. Excluding eight months of Juniper results prior to the acquisition, HPE says revenue is expected to grow between 8% and 11% in fiscal 2026.

By fiscal 2028, HPE said that it expects to generate more than $3.5 billion in free cash flow, with adjusted earnings of at least $3.00 a share. Wall Street’s target for 2028 free cash flow is $3.41 billion with earnings of $3.04 a share.

Shares fell more than 8% in after-hours trading on the news.

CEO Antonio Neri told Barron’s after the analyst event that he believes the stock’s drop is an immediate reaction to the company’s 2026 financial guidance. However, he also thinks that Wall Street earnings expectations were not “correctly aligned to our share count.”

Neri also said that he believes investors will quickly see the positive investment opportunity HPE is offering and points to the long-term guidance and plans to increase shareholder valie as proof of the growth opportunities ahead.

“We are not going to drive revenue growth for the sake of revenue growth, because our focus is generating cash that we can give back to shareholders. And I think now, we are in that phase of the journey. Our guidance demonstrates that we will do that, and that’s going to drive significant value,” Neri said.

HPE said on Wednesday that it’s increasing its annual dividend for fiscal 2026 by 10%, while increasing it share repurchase capacity by $3 billion, bringing the total buyback authorization to about $3.7 billion.

In laying out its forecasts for the next several years, HPE said it is focused on capturing profitable growth in the artificial intelligence infrastructure market as companies spend big on the hardware and software needed to power AI, while transitioning customers to the latest HPE servers and reducing costs.

“In HPE’s new chapter, our strengthened portfolio will create more profitable growth, increasing capital return opportunities that deliver even greater value to our shareholders,” Neri said in the news release on Wednesday.

Shares of HPE are up 20% this year. Investors seem optimistic about the acquisition of Juniper. The combined companies are looking to better compete with large networking firms like Cisco Systems.

“Networking has become a foundational pillar of HPE’s business. With the acquisition of Juniper Networks, Inc., HPE has created an opportunity to disrupt the status quo in the networking industry,” HPE said on Wednesday.

Write to Angela Palumbo at angela.palumbo@dowjones.com