HPE lifts networking growth and margin goals

Enterprise network switches in a data center highlight improved AI-driven networking margins for HPE

Key Points

01HPE raises fiscal 2027 networking revenue growth outlook to high-teens to low-20s percent
02Networking operating margin now targeted at mid- to high-20s percent in fiscal 2027
03Cumulative fiscal 2026 "Networks for AI" orders forecast increased to over $3 billion
04Data center networking revenue expected to grow at low- to high-50s percent CAGR through fiscal 2029

HPE upgrades networking growth outlook

Hewlett Packard Enterprise (HPE) has raised its fiscal 2027 revenue growth outlook for its Networking segment to a range of high-teens to low-20s percent. The company links the stronger forecast to accelerating demand for AI-related infrastructure and networking solutions.

Alongside the revenue outlook, HPE now expects the Networking segment operating margin to reach the mid- to high-20s percent range in fiscal 2027. For fiscal 2026, the company continues to project a networking operating margin in the low-20s percent range.

AI-driven demand and Networks for AI orders

HPE has increased its expectation for cumulative fiscal 2026 "Networks for AI" orders to more than $3 billion. This higher target reflects growing customer demand for networking solutions designed to support AI workloads in data centers.

The company highlighted AI infrastructure as a key driver of its upgraded networking outlook. Stronger visibility into AI-related projects and expanded customer commitments underpin the higher orders expectation.

Data center networking growth expectations

HPE now expects its data center networking revenue to grow at a low- to high-50s percent compound annual growth rate from fiscal 2026 through fiscal 2029. This makes data center networking the fastest-growing part of the company’s networking portfolio.

The multiyear growth outlook underscores HPE’s view that data center networks will expand rapidly as organizations scale AI and cloud workloads. The company is positioning its portfolio to capture that anticipated demand.

Major Vultr AI systems order

As part of its AI-focused go-to-market strategy, HPE announced a $1.2 billion order from cloud infrastructure provider Vultr. The order covers AMD Helios AI Rack systems to be deployed in Vultr’s U.S. data centers.

The Vultr agreement represents a significant win for HPE’s AI infrastructure business. It also illustrates how cloud providers are investing in large-scale AI compute and networking platforms.

Juniper integration and cost savings target

HPE has raised its target for annual run-rate cost savings from the Juniper Networks acquisition to $800 million by the end of fiscal 2028. The previous goal had been at least $600 million in annual run-rate savings.

The higher savings target reflects progress on integration plans and anticipated efficiencies across the combined networking operations. HPE expects these cost savings to support its improved margin outlook in the Networking segment.

Key Takeaways

01HPE’s upgraded networking revenue and margin targets signal confidence in sustained AI-related demand across its portfolio.
02Higher "Networks for AI" order expectations and the large Vultr deal show that AI infrastructure is becoming a central growth engine for HPE.
03The raised Juniper synergy goal and strong data center networking CAGR outlook together suggest HPE is seeking both scale and efficiency in its networking strategy.

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