Hewlett Packard Enterprise reported fiscal Q3 2026 revenue of $12.21 billion, up 33.7 percent year-on-year and 14.4 percent sequentially. Operating income surged 5.6x to $1.39 billion. Net income rose 5.5x to $1.51 billion, equal to 12.4 percent of revenue — profitability the company has not matched since the Unix systems boom of the late 1980s and early 1990s.

The quarter ended in July. Cash and investments closed at $6.22 billion, up 11.6 percent from the prior year. CEO Antonio Neri told analysts the demand environment resembles the late-1990s Dot Com surge.

What did Cloud & AI deliver?

The Cloud & AI group — HPE's largest segment, combining servers, storage, financial services, and tech support — grew 25.4 percent to just over $9 billion, up 17.3 percent sequentially. Operating income topped $1.54 billion, more than triple the prior year.

Within the group:

• Server sales: up 35.3 percent to $6.77 billion
• Storage: up 10.2 percent to $1.29 billion
• Financial services: flat at $883 million

HPE booked $2.4 billion in new AI system orders in Q3. AI server revenue reached just under $1.6 billion, up roughly 7 percent year-on-year. The AI server backlog stood at $6.8 billion at quarter close.

How is networking performing?

The Networking group, anchored by the Juniper acquisition, posted $2.89 billion in revenue, up 74.9 percent year-on-year. Campus and branch switching delivered $1.44 billion (up 31 percent). Routing reached $788 million, up 3.7x year-on-year, fueled by hyperscalers, cloud builders, and neoclouds seeking non-Cisco kit.

AI networking orders hit $700 million in Q3, with backlog at $800 million. HPE began tracking this category separately following the Juniper deal. AI networking orders rose 3.5x year-on-year.

What does the Oracle deal cover?

Post-quarter, HPE signed a deal to supply Oracle with Juniper QFX switches built on Broadcom's Tomahawk 6 ASIC at 102.4 Tb/sec. That ASIC launched in June 2024 and is now shipping. The contract also includes Juniper's AIOps software for network management.

HPE characterized the agreement as part of a potential multi-gigawatt datacenter rollout spanning multiple years. As part of the deal, HPE issued Oracle warrants for up to 4.2 million HPE shares, worth more than $200 million at pre-announcement pricing. Vesting terms were not disclosed.

Is the $3.5B hyperscaler deal different?

Separately, HPE has a $3.5 billion deal with an unnamed hyperscaler — but Neri reframed the customer on the call.

"It is a hyperscaler customer, but think about them as an enterprise customer who is going to use our AI inferencing for their own internal usage," Neri said. "This is about a multi-billion-dollar AI inferencing for their own internal usage as an enterprise customer. It just happened to be they are labeled as a hyperscaler customer."

How did traditional servers perform?

The non-AI server business grew 52 percent to $5.17 billion. A ProLiant refresh cycle is driving dense, component-heavy boxes with elevated CPU, DRAM, flash, and disk bills.

HPE's core systems business — servers, storage, networking, support, and financing — reached $10.49 billion in Q3, up 35.1 percent year-on-year and 15.6 percent sequentially. The channel's publication's operating-income allocation came in at $1.86 billion.

Are customers pushing back on prices?

HPE reports no resistance. Price increases on CPUs, GPUs, DRAM, flash, and networking flowed through cleanly.

"At the beginning of this hyper cycle, on the cost, obviously they were a little bit in shock, and they're trying to navigate through that timing," Neri explained. "But they're getting smarter about where to land their budgets and how to optimize for these token economics. When you do it on premise, and we do that ourself, and we share the number, we can see up to 60 percent cost benefits on a token basis. And so, no, I don't see hesitation at this point in time."

What is HPE guiding for Q4?

The company expects $13.9 billion to $14.8 billion in fiscal Q4 revenue:

• Networking: 11 to 13 percent growth
• Cloud & AI: 60 to 72 percent growth

Delivery hinges on GPU allocations and customer-side power and facility readiness. HPE remains constrained by what it can secure from Nvidia and AMD.