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Hewlett Packard Enterprise (NYSE: HPE) supplies the servers, networking gear, and storage that businesses and governments need to run artificial intelligence (AI) applications in their own data centers. The company reported record third-quarter results last week, leading management to raise its full-year outlook. HPE also bumped up its fiscal 2027 guidance, projecting at least $5 billion in free cash flow for the year.
In Q3, revenue grew 34% year over year to $12.2 billion, and adjusted earnings jumped 152% to $1.11 per share, driven in part by higher gross margins. Management expects margins to settle at lower levels as AI systems account for a larger share of shipments. Total AI orders of $3.1 billion in the quarter pushed the backlog to $7.6 billion, and bookings for traditional servers were up 75% as customers purchased AI-enabled hardware.
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With demand at record highs, backlog growth is outpacing actual shipments as memory and storage drives remain in short supply. That suggests new investment potential for this veteran tech giant.
