HPE fiscal 2026 guidance disappoints but analysts see long-term growth potential

Investing.com -- Hewlett Packard Enterprise’s (NYSE: HPE) investor day in New York left analysts pointing to near-term caution but reaffirming confidence in the company’s longer-term growth outlook.

HPE shares are down more than 8% on Thursday shortly after the open.

Barclays said the company’s fiscal 2026 guidance “underwhelmed for the business,” though it viewed this largely “due to management conservatism and some tough compares.”

The firm noted networking growth of low- to mid-single digits and cloud and AI growth in the mid-single to low double digits, bringing total revenue growth to 5–10 percent.

Margins are said to remain pressured by the AI server business, but Barclays said management “continues to see legs in the top-line story, particularly with a sovereign and enterprise focus.”

HPE expects networking revenue to rise 5–7 percent annually between fiscal 2025 and 2028, with cloud and AI growing 4–8 percent.

The company guided to networking margins of 25–28 percent and cloud and AI margins of 8–10 percent by fiscal 2028, when earnings per share are projected to reach at least $3.

Elsewhere, Morgan Stanley called the event “down, but not out,” noting that HPE’s fiscal 2026 EPS guidance fell below consensus but that the long-term framework can play out if execution remains consistent.

The firm said it remains “convinced that our Overweight thesis can play out,” noting that “EPS is expected to reach at or above $3 by FY28,” on stronger networking contribution, and higher free cash flow conversion.

Morgan Stanley added that HPE’s “focus on de-leveraging over buybacks” was the right approach, and said networking and AI remain long-term growth engines supported by enterprise and sovereign demand.

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