HPE stock jumps 28% on Q2 beat, boom in AI business

Today’s headlines

What’s happening: Shares of Hewlett Packard Enterprise Inc soared in after-hours trading on Monday following the release of quarterly results.

What happened: The server and networking products maker reported record earnings for its fiscal second quarter.

The earnings beat was the highest the company had announced since 2018 and was driven by a surge in companies spending on AI infrastructure.

How were the results: The Texas-based company reported almost 40% year-on-year sales growth for the quarter ended April 30.

• Revenues grew to $10.68 billion, topping consensus estimates of $9.79 billion.
• Adjusted earnings came in at 79 cents per share, which surpassed Wall Street expectations of 53 cents per share.

Why it matters: Hewlett Packard Enterprise delivered a beat across all key metrices. Non-GAAP operating margins expanded to 13.3%, while non-GAAP operating profits grew 132% to $1.423 billion.

Cloud and AI revenues grew to $7.707 billion. Within this unit, the Server sub-division generated revenues of $5.45 billion, significantly higher than market expectations of $4.66 billion. The Server unit benefited from growing adoption of agentic AI.

“Traditional server orders increased triple digits as customers continue to modernize their compute infrastructure and invest in AI inferencing,” CEO Antonio Neri said during the earnings call.

Management explained that training AI models requires massive GPUs, while performing tasks with AI needs standard CPU-based traditional servers. With more companies using AI to streamline tasks, increase efficiency and reduce cost, the demand for secure, on-premise servers had risen, fuelling the company’s server sales and profit margins.

Hewlett Packard Enterprise said that its orders had more than doubled year-on-year, taking the company to a “record orders backlog.”

Management raised their revenue growth guidance for fiscal 2026 to a range of 29%-to-33%, from their prior projection of 17%-22%. They also raised the adjusted earnings outlook to $3.35-$3.45 per share, from the earlier forecast of $2.30-$2.50 per share.

How shares responded: HPE’s shares jumped 28.04% to $ 60.18 in extended trading hours following the release of quarterly earnings on Monday. The stock has almost doubled in value year-to-date.

What to watch: Investors will continue monitoring rising adoption of agentic AI. They will also keep an eye on the integration of Juniper Networks, which HPE acquired last year.

The markets today

The Australian dollar in focus today ahead of some important economic data

Context: The Australian dollar fell slightly versus the US dollar this morning as investors digested the latest economic reports.

Details: Australia’s S&P Global Manufacturing PMI for May was revised higher to 50.7, from a preliminary estimate of 50.2. This still marked a downturn from April’s reading of 51.3 and was the fourth consecutive month of decline.

The NZ–Indeed Australian Job Ads rose 1.8% in May, after the previous month’s decline of 0.6%. It marked the first gain since February and was driven by stronger demand in construction, education and nursing.

Australia’s current account deficit widened to A$27.1 billion in the first quarter of 2026 from A$23.0 billion in the previous quarter. The figure was worse than market expectations of a deficit of A$23.0 billion and represented the largest current account shortfall on record.

The Australian dollar remained under pressure with Middle East tensions mounting again on reports of Iran pausing all peace talks with the US and considering completely blocking the Strait of Hormuz in response to Israel’s offensive in Lebanon.

Weakness in the US dollar lent some support to the AUD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.02% to 99.18 this morning.

The AUD/USD pair edged lower by 0.06% to 0.7163 this morning, while the ASX200 fell 0.40% to 8,694.70.

What to watch: Investors will continue monitoring developments related to the US-Iran conflict.

Data on Australia’s composite PMI and GDP growth, scheduled to be released tomorrow, will remain in focus. Australia’s composite PMI, which declined to 47.8 in May from 50.4 in April, is expected to remain at 47.8. The country’s GDP growth, which accelerated to 2.6% year-on-year in the fourth quarter of 2025 from the previous quarter’s 2.1%, is expected to rise again to 2.7% in the first quarter of 2026.

Other Markets: European indices closed lower on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.68%, 0.40%, 0.45% and 0.76%, respectively.

The news shaping the markets

Ukraine’s foreign minister said drone strikes deep inside Russia could pressure President Vladimir Putin to end the war. The news sent the USD/RUB pair lower in forex trading this morning.

Indonesia’s S&P Global Manufacturing PMI rose to 50.0 in May from a 10-month low of 49.1 in April. Manufacturing activity entering the expansion zone lent support to the AUD/USD forex pair.

South Korea’s annual inflation rate accelerated to 3.1% in May, from 2.6% in the previous month. Then figure coming in higher than market estimates of 3.0% sent the USD/KRW pair higher in forex trading this morning.

Mexico’s S&P Global Manufacturing PMI rose to 49.6 in May from April’s 47.7 reading. The deterioration in factory activity becoming less severe exerted pressure on the USD/MXN forex pair.

Japan’s monetary base shrunk by 12.20% year-on-in May, worse than April’s contraction of 11.30%, which took the USD/JPY higher in forex trading this morning.

What else to watch today

Bank of England’s consumer credit and mortgage approvals (1230 UAE Time), Eurozone’s inflation rate (1300 UAE Time), Singapore SIPMM Manufacturing PMI (1700 UAE Time) and US JOLTs Job Openings (1800 UAE Time).