Hewlett Packard Enterprise (HPE) announced Wednesday that it is revising its long‑term revenue outlook for its networking segment upward, citing robust demand driven by the artificial‑intelligence boom. The company also disclosed a major new contract with cloud‑infrastructure firm Vultr, worth $1.2 billion, to deliver AMD‑based AI server racks to the provider’s U.S. data centers.
Higher growth expectations for networking
HPE now expects networking segment revenue to expand at a compound annual growth rate in the high‑teens from fiscal 2026 through fiscal 2029. This is a significant upgrade from its prior guidance of 5 %‑7 % annual growth for fiscal 2025‑2028. The company also lifted its fiscal 2027 networking growth forecast to a range in the high‑teens to low‑20s percent, up from an earlier 14 %‑17 % projection.
“AI is reshaping the technology stack, making the network more strategic and driving significant new demand from enterprises and service providers,” said Rami Rahim, head of HPE’s networking unit, in a statement. The comment reflects HPE’s view that AI workloads are creating a surge in demand for high‑performance networking equipment that can handle massive data flows.
Vultr contract highlights AI‑focused hardware demand
In the same announcement, HPE revealed it will supply Vultr with AMD Helios AI racks. The racks combine AMD AI chips with HPE networking switches and software, providing the compute and connectivity needed for AI‑intensive applications. The $1.2 billion order underscores the growing appetite among cloud providers for purpose‑built AI infrastructure.
Vultr, a fast‑growing cloud services firm, plans to deploy the new racks across its U.S. data‑center footprint, expanding capacity for customers running large language models, generative AI tools and other data‑heavy workloads.
Cost‑saving targets and Juniper integration
HPE also updated its cost‑saving goals related to its 2023 acquisition of Juniper Networks. The company now aims for $800 million in annual run‑rate savings by the end of fiscal 2028, up from an earlier target of at least $600 million. The integration of Juniper’s networking portfolio continues to bolster HPE’s overall offering, giving it a broader suite of products to meet enterprise and service‑provider needs.
Analysts note that HPE’s revised outlook and the Vultr contract signal confidence in the company’s ability to capitalize on the AI wave, even as competition from Dell Technologies and Super Micro Computer intensifies.
Market reaction
Following the news, HPE shares rose nearly 6 % in pre‑market trading, reflecting investor optimism about the company’s growth trajectory and its expanding role in AI‑centric data‑center solutions.
The upgraded forecasts and sizable contract illustrate how major technology firms are aligning product roadmaps with the accelerating adoption of AI across industries. HPE’s focus on networking and AI‑ready hardware positions it to benefit from continued investment in cloud infrastructure and enterprise digital transformation.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
