HPE boosts networking growth outlook, gets $1.2 billion AI order from cloud firm Vultr

Sept 30 : Hewlett Packard Enterprise on Wednesday raised its long-term revenue growth forecast for its networking business, driven by the AI boom and announced a $1.2 billion order to provide AMD server racks to cloud firm Vultr.

Shares of HPE rose nearly 6 per cent in premarket trading, as the company hosted its networking investor day.

Here are some details:

• The company now expects networking segment revenue to grow at a compound annual growth rate in the high teens from fiscal 2026 to fiscal 2029, up from its previous forecast of 5 per cent to 7 per cent annual growth from fiscal 2025 through fiscal 2028.

• HPE, which competes with Dell and Super Micro Computer, is benefiting as customers increasingly buy its servers and networking products to power AI applications such as ChatGPT.

• The company's networking unit, which expanded after the acquisition of Juniper Networks last year, mainly consists of products and services that connect servers, data centers and other devices to networks and software applications.

• The company lifted its target for cost savings related to its Juniper Networks buyout to $800 million in annual run-rate by the end of fiscal 2028, up from its earlier target of at least $600 million.

• HPE said it will provide AMD Helios AI racks, equipped with AI chips and HPE's networking switches and software, to Vultr's US data centers.

• The company also raised its fiscal 2027 networking segment revenue growth forecast to the high teens to low 20s percentage range, up from a previous forecast of 14 per cent to 17 per cent.

• "AI is reshaping the technology stack, making the network more strategic and driving significant new demand from enterprises and service providers," HPE's networking unit head Rami Rahim said in a statement.