HPE Stock Sells Off On Weak Fiscal 2026 Guidance, Networking Outlook

Hewlett Packard Enterprise (HPE)’s fiscal 2026 financial outlook fell short of Wall Street expectations amid slowing growth in its networking business. HPE stock fell after it hosted an analyst meeting.

HPE forecast revenue growth of 5% to 10% in fiscal 2026 at an analyst meeting in New York on Wednesday. In the current fiscal year, which ends October 31, HPE estimates growth of 15%.

Its financial outlook includes recently acquired Juniper Networks.

At Evercore ISI, analyst Amit Daryanani said in a report: “HPE has guided networking growth to the low and mid-single digits for fiscal 2026 as the year is deliberately focused on integrating Juniper with Aruba and aligning sales movements. Management indicated they expect clearer revenue synergies after 2026 with operating margins expected to advance from Low 20s to 25%-28% in the long term Long term cost synergies, scaling and upgrading the mix through switching AI data centers.”

For the networking business, HPE said it expects sales to grow in a range of 5% to 7% for fiscal years 2026 to 2028.

The maker of computer servers, networking equipment and data storage systems forecast adjusted earnings per share of $2.20 to $2.40 for the next fiscal year, below analysts’ expectations of $2.43.

“Financial networking guidance for 2026 has been disappointing for the business, although we believe largely due to management conservatism and some difficult comparisons,” Barclays analyst Tim Long said in a report. “Margin guidance continues to come under pressure from the AI ​​server business, although management still sees its legs in the top story, particularly with a focus on sovereigns and institutions.”

“Network operating margins in FY2026 are expected to be low at 20%, while cloud computing and AI range from 7% to 9%,” Long added.

Competition for AI servers is intense

Wall Street analysts have focused on AI-related server revenue growth in HPE’s data center business. Competition with Dell Technologies (DELL)’s AI servers are getting hot.

On the stock market today, HPE shares fell 8% to 23 in morning trading. HPE stock reached a record high of 26.44 on October 8. Shares rose 17% in 2025.

In June, the Justice Department agreed to let HPE’s $14 billion purchase of Juniper go forward.

“HPE has introduced a new segmentation framework that reduces disclosure while introducing some new metrics,” Raymond James analyst Simon Leopold said in a report. “The new Networking segment includes former Juniper businesses with Campus, Data Center, WAN and Security as well as HPE’s Intelligent Edge. The Cloud and AI segment includes traditional servers, AI platforms, storage services and financial services. HPE will continue to develop AI platforms, but the low detail of the remaining elements represents a risk.”

HPE Stock: Shareholder Returns

The company also plans to increase its annual dividend for the next fiscal year by 10%, to about 57 cents, from 52 cents.

The company’s board of directors also approved an additional $3 billion to repurchase shares, bringing the total repurchase authorization to approximately $3.7 billion.

However, shareholder returns may be limited, UBS analyst David Vogt said in a report.

“With three times leverage and an estimated $600 million in restructuring cash outlays in fiscal 2026, equity-friendly initiatives such as aggressive buybacks or preference retirements are unlikely to mitigate the share price decline with debt repaying the underlying use of cash for at least the next 24 months.”

IBD Methodology: How to Invest in Stocks with Risk Management

HPE reported fiscal third-quarter earnings of 44 cents per share on an adjusted basis, down 12% from a year earlier. The company’s core computer server business has suffered from margin pressures.

Wall Street analysts have focused on AI-related server revenue growth in HPE’s data center business. Competition with Dell Technologies (DELL)’s AI servers are getting hot.

HPE stock technical evaluations

In June, the Justice Department agreed to let HPE’s $14 billion purchase of Juniper go forward.

Heading into HPE Investor Day, the technology stock has an IBD Composite Rating of 83 out of a top 99, according to IBD Stock Screener.

Meanwhile, HPE stock carries an Accumulation/Distribution rating of B. This rating analyzes price and volume changes in the stock over the past 13 weeks of trading. A+ indicates heavy institutional buying; E means heavy selling. Think of C as neutral.

Follow Reinhardt Krauss on X, formerly Twitter, @reinhardtk_tech For updates on artificial intelligence, cybersecurity, and cloud computing.

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