HPE shares surge on upgraded networking outlook and $1.2B Vultr AI deal

Investing.com -- Hewlett Packard Enterprise (NYSE: HPE) shares climbed 4.5% on Wednesday after the tech giant flexed its growing infrastructure muscle, upgrading its long-term networking revenue forecast and unveiling a massive $1.2 billion AI systems deal with cloud provider Vultr.

The blockbuster agreement with Vultr marks the first major order for the AMD Helios AI Rack by HPE systems. Slated for deployment across Vultr’s U.S. data centers, the infrastructure features purpose-built HPE scale-up switching and integrates 72 AMD Instinct MI455X GPUs per rack. The deal underscores HPE’s aggressive—and lucrative—push to capture the surging demand for AI-driven cloud infrastructure.

Beyond the Vultr deal, HPE management used Wednesday’s Networking Investor Day to signal accelerating momentum across its broader portfolio. The company expects sustained growth as it aggressively captures market share across its Data Center Networking, Routing, and Campus & Branch segments.

Key Upgrades to HPE’s Financial Outlook:

• Accelerated Near-Term Growth: Fiscal 2027 Networking segment revenue is now projected to grow in the high-teens to low-20s percentage range, a notable bump from previous guidance.

• Long-Term Data Center Boom: Data Center Networking revenue is expected to surge at a low-to-high 50s% compound annual growth rate (CAGR) through fiscal 2029.

• Steady Routing Gains: Routing revenue is projected to grow at a low-to-high 20s% CAGR over the same period.

• Stable Margins: The Networking segment is expected to maintain highly profitable operating margins in the mid-to-high 20s% range from fiscal 2027 through 2029.

HPE also sweetened the outlook on its blockbuster Juniper Networks acquisition. The company raised its cost synergy target, now projecting $800 million in annual run-rate savings by the end of fiscal 2028—a significant 33% increase from its initial target of at least $600 million.

For HPE, the dual announcements validate a strategic pivot toward high-performance networking capable of supporting next-generation artificial intelligence workloads.

"AI is reshaping the technology stack, making the network more strategic and driving significant new demand from enterprises and service providers," said Rami Rahim, executive vice president and president of Networking at HPE

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