HPE hits $12.2 billion revenue, up 34% as AI demand drives blowout

HPE (HPE) — Q3 FY2026
Revenue: $12.2 billion, up 34% year-over-year
EPS: GAAP of $1.06, up $0.85 from the prior-year period; Non-GAAP (1) of $1.11, up $0.67 from the prior-year period
Guidance: Fiscal 2026 Fourth Quarter: estimates revenue to be in the range of $13.9 billion to $14.8 billion; GAAP diluted net EPS to be in the range of $1.12 to $1.22 and non-GAAP diluted net EPS (1) to be in the range of $1.20 to $1.30. Fiscal 2026 Full Year: revenue growth outlook range to 34% to 37%; GAAP operating profit growth range to be 1,070% to 1,105% and non-GAAP operating profit growth range between 100% to 105%; GAAP diluted net EPS to be in the range of $2.93 to $3.03 and non-GAAP diluted net EPS (1) to be in the range of $3.75 to $3.85; free cash flow to be at least $3.75 billion.
GAAP Gross margin: 40.1%
Non-GAAP Gross margin: 40.4%
GAAP Operating profit margin: 11.4%
Non-GAAP Operating profit margin: 16.2%
Cash flow from operations: $1.6 billion

Hewlett Packard Enterprise delivered a massive quarter, posting $12.2 billion in revenue for Q3 FY2026, representing a 34% year-over-year jump that comfortably cleared the consensus range of $11.93 billion to $11.97 billion. The hardware giant saw a dramatic expansion in profitability, with non-GAAP EPS hitting $1.11, significantly outpacing the company's own previous-quarter-end guidance of $0.88 to $0.93.

Bustered by surging demand for AI infrastructure and Juniper integration, HPE raised its full-year fiscal 2026 outlook. The company now expects annual revenue growth to land between 34% and 37%, up from the previous guidance of 29% to 33%. Management also set a high bar for the upcoming Q4:

• Q4 Revenue: $13.9 billion to $14.8 billion
• GAAP Diluted Net EPS: $1.12 to $1.22
• Non-GAAP Dil Net EPS: $1.20 to $1.30
• Full Year Free Cash Flow: at least $3.75 billion

The engine behind the beat was a shift toward the Cloud & AI segment, which generated $9.0 billion in revenue, up 25.4% year over year, while operating margins expanded significantly to 17.0% from 7.0% in the prior year. The Networking segment also saw explosive growth, with revenue reaching $2.9 billion, up 74.9% year-over-year, driven largely by a 270.0% surge in Routing and a 112.2% increase in Data Center Networking.

While the Financial Services segment remained flat at $0.9 billion (down 0.3%), the broader business is focused on capitalizing the AI wave. Investors are now looking to see if the $5.9 billion AI-system backlog translates into even higher shipments in the final quarter, as the company expects a peak in demand toward the end of the year.