Key Takeaways
- Second quarter FY2026 revenue reached a record $10.7 billion, representing a 40% year-over-year increase and surpassing the Street’s $9.76 billion forecast
- Earnings per share of $0.79 significantly exceeded analyst projections of $0.54, while the company achieved record levels in gross margin and free cash flow
- The networking division experienced explosive 148% year-over-year growth to $2.7 billion, powered by the integration of Juniper Networks
- Goldman Sachs dramatically increased its price objective from $32 to $79, while the Street consensus now stands at $64.65 with a Moderate Buy recommendation
- Full-year FY2026 outlook was upgraded, with management now forecasting 29–33% revenue expansion and free cash flow exceeding $3.5 billion
Shares of HPE opened Friday’s trading session at $49.16, marking an 8.4% decline for the day, although the stock has still delivered an impressive 60%+ return over the past month — positioning it among May’s top-performing large-cap technology stocks.
Hewlett Packard Enterprise Company, HPE
The pullback follows an extraordinary rally triggered by HPE’s fiscal Q2 2026 financial results released June 1, which significantly exceeded Wall Street expectations on multiple fronts.
Total revenue reached $10.68 billion, marking a robust 40% year-over-year expansion and comfortably beating the analyst consensus of $9.76 billion. Earnings per share landed at $0.79, demolishing the Street estimate of $0.54 by a substantial $0.25 margin.
The impressive performance extended beyond headline figures. HPE achieved record-breaking levels across gross margin, non-GAAP EPS, and free cash flow metrics simultaneously. GAAP gross margins climbed to 36.5%, representing an 810 basis point year-over-year improvement.
The networking division emerged as the quarter’s breakout performer. This segment generated $2.7 billion in revenue, an extraordinary 148% surge fueled by the strategic Juniper Networks acquisition. Data center networking specifically skyrocketed 233%.
Meanwhile, the cloud and AI segment expanded 23% to reach $7.7 billion, with server revenue climbing 33%. These figures underscore robust demand amid the ongoing AI infrastructure expansion cycle.
Goldman Sachs Dramatically Increases Price Forecast
Goldman Sachs responded quickly following the earnings release. On June 3, the firm upgraded its price target from $32 to $79 while maintaining its Buy recommendation. The bank emphasized growing confidence in HPE’s strategic positioning within AI infrastructure markets.
Goldman wasn’t the only firm making bullish adjustments. Loop Capital upgraded shares from Hold to Buy while increasing its target from $23 to $75. Barclays elevated its forecast to $67 with an Overweight stance. Raymond James set a $74 target with an Outperform rating. Argus established a $70 target alongside a Buy rating.
The current Street consensus price target rests at $64.65, with 11 analysts recommending Buy and 10 maintaining Hold ratings.
Forward Outlook and Shareholder Returns
Capitalizing on the strong quarterly performance, HPE elevated its full-year FY2026 projections. Management now anticipates revenue growth spanning 29–33% alongside free cash flow of no less than $3.5 billion. Third quarter EPS guidance was established at $0.88–$0.93.
The company also announced a quarterly dividend of $0.1425 per share, scheduled for July 15 distribution to shareholders of record as of June 16.
Regarding institutional activity, Havemeyer Place LP initiated a new stake valued at approximately $3.28 million. Several additional funds expanded their holdings during Q4, notably Vise Technologies, which increased its position by 72.9%. Institutional investors collectively control 80.78% of outstanding shares.
CEO Antonio Neri divested 150,000 shares at $26.50 on April 17 through a pre-established 10b5-1 trading arrangement. EVP Fidelma Russo sold 17,001 shares at $27.97 on April 21, also executing under a 10b5-1 plan.
HPE’s 12-month trading range extends from a low of $17.49 to a high of $64.25. The stock’s 50-day moving average currently sits at $31.65, while the 200-day moving average stands at $25.64.
