Hewlett Packard Enterprise posted $10.68 billion in second-quarter fiscal 2026 revenue, up 40 percent year over year, with net income of $595 million swinging from a $1.08 billion loss a year earlier. Operating income reached $747 million, reversing a $1.11 billion operating loss in the year-ago quarter.

The figures, reported for the three months ended April, mark the fourth and final quarter that includes easy year-over-year comparisons from the Juniper Networks acquisition. Cash and equivalents grew 9.3 percent sequentially to $5.29 billion.

How did AI systems compare to traditional servers?

Traditional servers outsold AI systems by a wide margin. HPE booked $3.91 billion in traditional server revenue, up 25 percent year on year. AI system sales reached $1.54 billion, a 66 percent increase.

The split highlights HPE's different position from archrival Dell. In its most recent quarter, Dell's traditional server revenue rose 89.3 percent to $8.54 billion, while AI system sales multiplied by 8.8X to $16.13 billion. HPE's AI system business is running at roughly one-tenth the size of Dell's.

What did the Cloud & AI and Networking segments deliver?

The Cloud & AI group, which bundles servers, storage and financial services, recorded $7.71 billion in revenue, up 22.9 percent. Segment operating income rose 2.3X to $954 million. Server sales climbed 32.7 percent to $5.45 billion. Storage contributed $1.18 billion, a 2.4 percent gain, with newer product lines growing while older lines declined.

The Networking group, combining datacenter networking, Aruba and Juniper, posted $2.69 billion in sales, up 2.5X year on year. Datacenter networking alone contributed $320 million, up 3.3X. Segment operating income reached $581 million, more than doubling on an easy compare that excluded Juniper from the prior-year base.

How does HPE stack against Dell and Nvidia's ecosystem?

Against the broader AI systems market, both HPE and Dell represent a small slice of Nvidia's footprint. Nvidia is on track to sell roughly $500 billion in system components this year, which could translate to about $600 billion in end-user AI system sales. Dell's $60 billion target would put it near 10 percent of that pie; HPE, at projected AI system volumes, would sit closer to 1 percent.

HPE's core datacenter business, stripped of branch, campus and high-level software revenue, totalled $9.08 billion, up 16.2 percent, with operating income of $1.25 billion, up 63.4 percent. That segment delivered about 82 percent of HPE's total operating income for the quarter.

What is the fiscal 2026 outlook?

HPE guided third-quarter fiscal 2026 revenue to between $11.5 billion and $12.1 billion. For the full fiscal year, the company raised its growth forecast to between 29 percent and 33 percent, implying revenue of $44.24 billion to $45.61 billion, the strongest annual expansion in years.

The Cloud & AI group is now expected to grow in the low 20 percent range, up from prior guidance of mid- to high single digits, driven by higher average selling prices and AI system expansion. The Networking group is forecast to grow between 72 percent and 75 percent for the full year.

The Juniper Networks deal added most of the operating profit lift in the quarter. HPE has no stated appetite for further large-scale M&A and is now focused on converting its AI system backlog as GPU allocations come through.