June 2 (Reuters) – Hewlett Packard Enterprise shares rallied nearly 29% in premarket trade on Tuesday, as investors cheered the AI server maker pulling forward its long-term financial targets by two years, buoyed by strong AI infrastructure demand.
HPE, which competes with Dell Technologies and Super Micro Computer in enterprise servers, is seeing sustained demand as large enterprises bring forward purchases to avoid supply risks amid surging memory chip prices.
Hyperscalers including Alphabet and Amazon are set to spend more than $700 billion on AI infrastructure this year, likely boosting demand for HPE’s server and networking products.
On Monday, the company raised its fiscal 2026 revenue growth forecast to 29%-33% from 17%-22% earlier and increased its networking segment growth outlook to 72%-75% from 68%-73%.
“The biggest takeaway from the quarter was that HPE is benefiting from the same pricing dynamic that has recently driven upside at Dell – customers are absorbing materially higher server prices with little evidence of demand destruction,” Morgan Stanley analysts said in a note.
Shares of Dell and SMCI rose 3% and 5% respectively.
HPE CFO Marie Myers told Reuters the key shift this quarter was the growing adoption of agentic AI as a core workload by enterprise customers. The company said its revised fiscal 2026 ranges for adjusted EPS and free cash flow were higher than what it projected to achieve by fiscal 2028.
HPE has a 12-month forward price-to-earnings ratio of 15.93, compared with Dell’s 24.14 and Cisco’s 25.56.
(Reporting by Kanishka Ajmera in Bengaluru; Editing by Mrigank Dhaniwala)
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