Key Stats for HPE Stock
- Price Change for $HPE stock: -10%
- Current Share Price: $22.5
- 52-Week High: $26
- $HPE Stock Price Target: $26
What Happened?
HPE (HPE) stock tumbled 10% after the company issued fiscal 2026 guidance that fell well short of Wall Street expectations, despite announcing new strategic initiatives and increased shareholder returns.
The data center equipment maker forecast adjusted earnings per share of $2.20 to $2.40 for fiscal 2026. That matches analyst estimates of $2.40 at the midpoint, but disappointed investors who were expecting more upside.
HPE expects revenue growth between 5% and 10% in fiscal 2026 (ending in October), dramatically below Wall Street’s 17% growth estimate.
The weak outlook comes despite HPE completing its acquisition of Juniper Networks, which now represents over 50% of the company’s operating profit.
Management outlined plans to generate at least $600 million in annual cost synergies from the Juniper integration by 2028, plus another $350 million from internal cost-cutting initiatives called Catalyst. Combined, these programs should deliver roughly $1 billion in structural cost savings.
CEO Antonio Neri emphasized that the company will focus on several strategic priorities, including building out its networking business, capturing profitable AI infrastructure growth in sovereign and enterprise segments, and expanding its high-margin GreenLake cloud platform.
The company expects networking revenue to grow at a modest, low-to-mid single-digit rate in fiscal 2026 on a pro forma basis.
HPE also announced its board approved an additional $3 billion share buyback authorization, bringing total repurchase capacity to $3.7 billion.
The company plans to increase its annual dividend by 10% to $0.57 per share starting in fiscal 2026.
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What the Market Is Telling Us About HPE Stock
The sharp decline in HPE stock signals investor disappointment with the company’s near-term growth trajectory.
While the Juniper acquisition transforms HPE’s portfolio and positions it as a major networking player, the integration challenges and conservative revenue outlook are weighing on sentiment.
Management’s low-to-mid single-digit networking growth forecast appears cautious given the market opportunity.
The bulk of the business remains in slower-growing campus, branch, and routing infrastructure rather than fast-expanding data center AI networking.
HPE didn’t bake in revenue synergies for 2026, prioritizing integration execution over aggressive targets.
HPE’s AI business shipped $1.6 billion in revenue last quarter with a $3.7 billion backlog, and more than 50% of that backlog now comes from higher-margin enterprise and sovereign customers.
However, management indicated AI revenue could be lumpy quarter to quarter as HPE is being selective about which large AI deals it pursues, focusing on profitability over market share.
The guidance suggests fiscal 2026 will be a transition year as HPE digests Juniper, implements cost reductions, and positions for stronger growth in fiscal 2027 and beyond.
The company expects significant margin improvement in the second half of the year as synergies ramp up. While the long-term transformation story remains intact, investors will need patience as HPE stock works through near-term headwinds.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!