We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
HPE's Networking Orders Signal Continued Growth: What's Ahead?
Read MoreHide Full Article
Key Takeaways
HPE's networking revenues jumped 74.9%, while normalized orders rose 36%, outpacing the revenue growth.
HPE secured a gigawatt-scale Oracle deal as networking purchase commitments more than doubled sequentially.
Acquisition expands HPE's networking reach as AI inferencing and agentic workloads drive demand.
Hewlett Packard Enterprise’s (HPE - Free Report) networking revenues were $2.89 billion, which increased 74.9% year over year on a reported basis and 10% on a normalized basis. The segment's operating margin was 22% compared with 22.1% in the year-ago quarter. The company’s normalized Networking orders increased 36%, materially faster than its year-over-year revenue growth.
HPE’s third-quarter fiscal 2026 revenues of $12.21 billion rose 33.7% year over year, driven largely by its Campus & Branch revenues of $1.44 billion, with Routing contributing $788 million. Networks for AI orders reached $700 million in the quarter, taking cumulative orders to $2.2 billion.
The company also signed a gigawatt-scale deal with Oracle for routers and switches supporting a major AI cloud infrastructure buildout. Management said that networking purchase commitments more than doubled sequentially to help improve supply availability and convert the elevated backlog.
HPE’s Juniper acquisition is broadening the company’s reach across campus and branch, data center switching, routing and security. Integration remains ahead of schedule, prompting HPE to raise its fiscal 2026 target to $2.5-$3 billion. Networking growth was supported by Hewlett Packard Enterprise’s model of packaging compute, storage, networking and cloud management into AI systems and Private Cloud AI solutions.
As AI inference and agentic workloads are on the rise, the demand for HPE’s networking solutions will remain high. However, competition in this space remains intense as the company competes on technology, innovation, price, quality and reliability against larger vendors.
How Competitors Fare Against HPE
Hewlett Packard Enterprise competes with Cisco (CSCO - Free Report) and Arista Networks (ANET - Free Report) in the AI networking space. Arista Networks’ leadership in software-driven switching, growing AI fabric adoption, broader campus and routing reach, and continued product innovation support a durable growth outlook for the company.
Cisco closed fiscal 2026 with $9.3 billion in hyperscaler AI infrastructure orders, about 4.5 times fiscal 2025, and roughly $4 billion in related revenues. Management expects hyperscaler AI revenues to reach $7.5 billion in fiscal 2027. In the fourth quarter of fiscal 2026, networking product orders rose 40% year over year, the eighth straight quarter of double-digit growth.
Cisco’s campus and branch networking has grown about 20% for several quarters. CSCO identified more than $100 billion in Cisco end-of-life and end-of-support upgrade opportunities over the next few years. On the other hand, Arista Networks is positioned to benefit from sustained investment in AI, cloud and enterprise networking as customers expand high-speed Ethernet infrastructure.
HPE’s Price Performance, Valuation and Estimates
Shares of Hewlett Packard Enterprise have rallied 159.4% year to date, outperforming the Zacks Computer - Integrated Systems industry’s growth of 133.6%.
HPE YTD Performance Chart
Image Source: Zacks Investment Research
Despite the appreciation in the share price, HPE trades at a discount. From a valuation standpoint, HPE trades at a forward price-to-sales ratio of 1.52, below the industry’s 5.22.
HPE Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HPE’s fiscal 2026 earnings suggests year-over-year growth of 96.4%. Estimates have been revised upward in the past 30 days.
View the Zacks #1 Rank List
Image: Bigstock
HPE's Networking Orders Signal Continued Growth: What's Ahead?
Key Takeaways
Hewlett Packard Enterprise’s (HPE - Free Report) networking revenues were $2.89 billion, which increased 74.9% year over year on a reported basis and 10% on a normalized basis. The segment's operating margin was 22% compared with 22.1% in the year-ago quarter. The company’s normalized Networking orders increased 36%, materially faster than its year-over-year revenue growth.
HPE’s third-quarter fiscal 2026 revenues of $12.21 billion rose 33.7% year over year, driven largely by its Campus & Branch revenues of $1.44 billion, with Routing contributing $788 million. Networks for AI orders reached $700 million in the quarter, taking cumulative orders to $2.2 billion.
The company also signed a gigawatt-scale deal with Oracle for routers and switches supporting a major AI cloud infrastructure buildout. Management said that networking purchase commitments more than doubled sequentially to help improve supply availability and convert the elevated backlog.
HPE’s Juniper acquisition is broadening the company’s reach across campus and branch, data center switching, routing and security. Integration remains ahead of schedule, prompting HPE to raise its fiscal 2026 target to $2.5-$3 billion. Networking growth was supported by Hewlett Packard Enterprise’s model of packaging compute, storage, networking and cloud management into AI systems and Private Cloud AI solutions.
As AI inference and agentic workloads are on the rise, the demand for HPE’s networking solutions will remain high. However, competition in this space remains intense as the company competes on technology, innovation, price, quality and reliability against larger vendors.
How Competitors Fare Against HPE
Hewlett Packard Enterprise competes with Cisco (CSCO - Free Report) and Arista Networks (ANET - Free Report) in the AI networking space. Arista Networks’ leadership in software-driven switching, growing AI fabric adoption, broader campus and routing reach, and continued product innovation support a durable growth outlook for the company.
Cisco closed fiscal 2026 with $9.3 billion in hyperscaler AI infrastructure orders, about 4.5 times fiscal 2025, and roughly $4 billion in related revenues. Management expects hyperscaler AI revenues to reach $7.5 billion in fiscal 2027. In the fourth quarter of fiscal 2026, networking product orders rose 40% year over year, the eighth straight quarter of double-digit growth.
Cisco’s campus and branch networking has grown about 20% for several quarters. CSCO identified more than $100 billion in Cisco end-of-life and end-of-support upgrade opportunities over the next few years. On the other hand, Arista Networks is positioned to benefit from sustained investment in AI, cloud and enterprise networking as customers expand high-speed Ethernet infrastructure.
HPE’s Price Performance, Valuation and Estimates
Shares of Hewlett Packard Enterprise have rallied 159.4% year to date, outperforming the Zacks Computer - Integrated Systems industry’s growth of 133.6%.
HPE YTD Performance Chart
Image Source: Zacks Investment Research
Despite the appreciation in the share price, HPE trades at a discount. From a valuation standpoint, HPE trades at a forward price-to-sales ratio of 1.52, below the industry’s 5.22.
HPE Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HPE’s fiscal 2026 earnings suggests year-over-year growth of 96.4%. Estimates have been revised upward in the past 30 days.
Image Source: Zacks Investment Research
HPE currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.