Key facts
- HPE now expects networking segment revenue to grow at a compound annual growth rate in the high teens from fiscal 2026 to fiscal 2029.
- The previous forecast for networking segment revenue growth was 5% to 7% annually from fiscal 2025 through fiscal 2028.
- HPE lifted its target for cost savings from the Juniper Networks buyout to $800 million in annual run-rate by the end of fiscal 2028.
- The earlier target for Juniper Networks buyout cost savings was at least $600 million.
- HPE will provide AMD Helios AI racks to Vultr's US data centers.
- HPE raised its fiscal 2027 networking segment revenue growth forecast to the high teens to low 20s percentage range.
Hewlett Packard Enterprise (HPE) on Wednesday raised its long-term revenue growth forecast for its networking business, citing the artificial intelligence boom, and announced a $1.2 billion order from cloud firm Vultr to provide AMD server racks. The company's shares rose nearly 6% in premarket trading following the announcements made during its networking investor day.
HPE now anticipates its networking segment revenue to grow at a compound annual growth rate in the high teens from fiscal year 2026 through fiscal year 2029. This is a significant upward revision from its prior forecast of 5% to 7% annual growth between fiscal 2025 and fiscal 2028.
The company is experiencing increased demand for its servers and networking products, which are being utilized to power AI applications like ChatGPT. HPE's networking unit, which was expanded following its acquisition of Juniper Networks last year, focuses on products and services that connect various devices to networks and software applications.
Furthermore, HPE increased its target for annual run-rate cost savings from the Juniper Networks acquisition to $800 million by the end of fiscal 2028, up from a previous goal of at least $600 million. The deal with Vultr will involve HPE supplying AMD Helios AI racks, equipped with AI chips and HPE's networking switches and software, for Vultr's data centers in the United States. The company also revised its fiscal 2027 networking segment revenue growth forecast upwards to the high teens to low 20s percentage range, from a prior estimate of 14% to 17%.