Hewlett Packard Enterprise Surpasses Q3 Earnings Estimates Amid AI Server Demand Boom

Hewlett Packard Enterprise reported Q3 2025 financial results with revenue up 19% to $9.14 billion, beating the analyst consensus estimate. Earnings per share came in at $0.44, surpassing the $0.43 expected by Wall Street. Strong demand in AI server and networking divisions drove the results, with HPE now expecting revenue growth of 14% to 16% in fiscal year 2025, up from its previous forecast of 7% to 9%. HPE shares gained over 5% in early trading.

Hewlett Packard Enterprise (HPE) reported a robust performance for the third quarter of 2025, with revenue up 19% to $9.14 billion, surpassing the analyst consensus estimate of $8.35 billion. The company's earnings per share (EPS) came in at $0.44, exceeding the $0.43 expected by Wall Street. The strong results were driven by high demand in the AI server and networking divisions.

HPE's stock gained over 5% in early trading following the announcement, reflecting positive investor sentiment. The company's market capitalization stands at $30.17 billion, trading near InvestingPro's Fair Value estimate, indicating a balanced valuation.

Key Takeaways:
- Revenue Growth: HPE's Q3 2025 revenue rose 18% year-over-year, driven by strong performance in networking, server, and hybrid cloud segments.
- Acquisition Impact: The acquisition of Juniper Networks in July 2025 is expected to bolster HPE's networking capabilities.
- Inventory Reduction: HPE reported a significant inventory reduction of $933 million.
- AI Innovations: The company launched new server and AI innovations, enhancing its product portfolio.
- Cost-Saving Program: HPE initiated a cost-saving program targeting $350 million in gross savings by FY2027.

Financial Highlights:
- Revenue: $9.1 billion, up 18% year-over-year.
- Non-GAAP EPS: $0.44, exceeding the forecasted $0.42.
- Free Cash Flow: $790 million.
- Non-GAAP Gross Margin: 29.9%.
- Annualized Recurring Revenue (ARR): $3.1 billion.

Market Reaction:
Following the earnings announcement, HPE's stock rose by 0.84% in aftermarket trading, reflecting positive investor sentiment. The stock's last close was at $22.68, with a 52-week range between $11.97 and $24.66.

Outlook & Guidance:
HPE projects FY2025 revenue growth of 14-16% in constant currency. The company anticipates Q4 revenue between $9.7 billion and $10.1 billion, with networking revenue expected to rise by 60% quarter-over-quarter. Server revenue is forecasted to decline mid-to-high single digits, with a targeted operating margin of around 10%.

Executive Commentary:
Antonio Neri, CEO, stated, "Our vision for the company is clear, to lead in the AI era through a modern secure cloud native and AI-driven networking portfolio." Marie Myers, CFO, emphasized, "Free cash flow generation is paramount for us," highlighting the company's focus on financial health and strategic growth.

Risks and Challenges:
Supply chain disruptions, increased competition in AI and cloud markets, economic uncertainties, integration challenges of Juniper Networks, and currency fluctuations pose potential risks to HPE's performance.

Reference List:
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-hewlett-packard-enterprise-q3-2025-beats-forecasts-93CH-4223135