Hewlett Packard Enterprise (NYSE: HPE) posted record second-quarter results on Monday and accelerated its long-term financial goals by two years as expansion of AI data centers boosts demand for its servers and networking products.

HPE, which competes with Dell (NYSE: DELL) and Super Micro Computer (NASDAQ: SMCI), reported record revenue growth of 40% to $10.68 billion, beating analysts' average estimate of $9.79 billion. The adjusted earnings per share of 79 cents topped Wall Street expectations of 53 cents.

The company raised fiscal 2026 revenue growth outlook to between 29% and 33%, up from its prior expectations of 17% to 22%. It now expects annual networking segment revenue growth of 72% to 75%, a sharp increase from 68% to 73%.

“HPE delivered an exceptional quarter with record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow, reflecting strong execution and healthy demand across the business,” said Antonio Neri, president and CEO of HPE.

HPE raised annual adjusted EPS in the range of $3.35 to $3.45, compared with an earlier projection of $2.30 to $2.50. The company said its revised fiscal 2026 ranges for adjusted EPS and free cash flow are higher than what it projected the company would achieve by fiscal 2028.

HPE introduced a fiscal 2027 growth framework, expecting revenue growth of 8% to 12%, adjusted EPS growth of 12% to 16% and free cash flow of at least $4.5 billion. CFO Marie Myers said the strength of the quarter was largely driven by the performance of its traditional server business focused on enterprise customers.

“We drove high profitability and cash generation this quarter through continued operational discipline as well as executing ahead of schedule against Juniper Networks and Catalyst cost synergies,” said Marie Myers, executive vice president and CFO of HPE.