HPE raises networking growth outlook as Vultr places $1.2 billion AI server order

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HPE networking growth outlook

Highlights

HPE raises its networking segment revenue growth outlook to a compound annual rate in the high teens for fiscal 2026–2029, up from 5%–7% previously.
HPE increases its fiscal 2027 networking revenue growth forecast to the high teens–low 20s percentage range and shares rise nearly 6% in premarket trading.
Vultr places a $1.2 billion order for HPE's AMD Helios AI racks for U.S. data centers, alongside HPE lifting Juniper-related cost-saving targets to $800 million annually by fiscal 2028.

Networking targets rise on AI demand

As reported by Reuters, HPE on Wednesday said it now expects revenue in its networking segment to grow at a compound annual rate in the high teens from fiscal 2026 through fiscal 2029. That compares with its earlier forecast for annual growth of 5% to 7% from fiscal 2025 through fiscal 2028.

The company also raises its fiscal 2027 networking revenue growth forecast to a range in the high teens to low 20s, up from a previous outlook of 14% to 17%. HPE is presenting the updated targets during its networking investor day, and its shares rise nearly 6% in premarket trading.

HPE says the stronger outlook reflects an AI-driven shift in enterprise technology spending. In a statement, networking unit head Rami Rahim says AI is reshaping the technology stack, making networks more strategic and creating significant new demand from enterprises and service providers.

Juniper integration and U.S. data center expansion

HPE says its networking business, which expanded after last year's acquisition of Juniper Networks, mainly includes the products and services that connect servers, data centers and other devices to networks and software applications. The company also lifts its target for cost savings tied to the Juniper deal to $800 million in annual run-rate by the end of fiscal 2028, from an earlier goal of at least $600 million.

Separately, HPE says it will supply AMD Helios AI racks to cloud company Vultr for its U.S. data centers. The racks include AI chips as well as HPE networking switches and software, underscoring how server and networking demand are increasingly linked as cloud providers build out infrastructure for AI workloads.

HPE competes with Dell and Super Micro Computer, and the latest order highlights the broader industry push to capture spending from customers deploying applications such as ChatGPT. The combination of higher networking targets, larger cost-saving goals and a major AI infrastructure order signals a deeper role for HPE in enterprise and cloud data center expansion.

In our earlier article on rising bond yields, we explained how the jump in U.S. Treasury rates was tightening financial conditions and raising expectations for additional Federal Reserve hikes. We also outlined the spillover across assets—from pressure on gold and broad equities to why cash-rich megacaps could look more defensive, even as AI-linked earnings helped support stock markets.

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