HPE delivers mixed Q1, strong Q2 outlook

HPE delivered a mixed first quarter, but said revenue in the second quarter will be better than expected.

The company reported first quarter earnings of 31 cents a share on revenue of $9.3 billion, up 18% from a year ago. Non-GAAP earnings in the first quarter were 65 cents a share. Wall Street was expecting HPE to report first quarter non-GAAP earnings of 59 cents a share on revenue of $9.35 billion.

HPE CEO Antonio Neri said the company was seeing strong demand and networking upside. "Our Q1 results reflect our newly combined networking innovation, and effective operational discipline in a dynamic commodity supply environment. Demand for our products and solutions was strong, with orders increasing double digits year over year across all segments," said Neri.

By the numbers:

• Networking revenue in the first quarter was @.7 billion, powered by Juniper networks. Campus and branch revenue was $1.2 billion with data center networking revenue of $444 million. Router revenue was $780 million.
• Cloud and AI revenue was $6.3 billion, down 2.7% from a year ago.
• Server revenue was $4.2 billion, down 2.7% from a year ago. Storage revenue was $1.1 billion, up less than 1% from a year ago.

HPE's results landed after a strong quarter from Dell Technologies, which was propelled by AI infrastructure as well as traditional servers. See: Dell delivers blowout Q4, outlook on AI infrastructure boom

As for the outlook, HPE said AI infrastructure demand would boost the second quarter. HPE projected second quarter revenue of $9.6 billion to $10 billion, above the consensus estimate of $9.56 billion. Non-GAAP earnings guidance was 51 cents a share to 55 cents a share in line with expectations.

For fiscal 2026, HPE projected revenue of $17 billion to $22 billion with non-GAAP earnings between $2.30 a share to $2.50 a share, ahead of estimates of $2.36 a share.