Hewlett Packard Enterprise (NYSE: HPE) stock is falling 5% to $27.92 in Thursday trading despite delivering a strong fiscal third quarter and raising its outlook for both fiscal 2026 and fiscal 2027.
HPE’s quarterly revenue climbed 34% year over year to $12.2 billion, while adjusted earnings reached $1.11 per share, comfortably above the company’s previous outlook.
The company also raised its fiscal 2026 revenue-growth forecast to a range of 34% to 37%, up from the prior guidance range of 29% to 33%, yet supply constraints are giving investors reason to look past the headline numbers.
Hewlett Packard Enterprise’s Cloud and AI revenue rose 25% to $9 billion, with server revenue climbing 35% to $6.8 billion, while networking revenue jumped 75% to $2.9 billion.
Supply limitations, however, prevented HPE from converting more of its demand and orders into near-term revenue, with shortages involving memory, NAND, CPUs and drives all cited as meaningful constraints by management.
HPE’s inventory also increased to $11.82 billion from $7.16 billion a year earlier, reflecting efforts to secure supplies while component costs remain elevated.
Dell Technologies (NYSE: DELL) stock is holding relatively steady at around $492, having recently reported $60.9 billion of AI server orders in a single quarter alongside an AI backlog of $95 billion.
Super Micro Computer (NASDAQ: SMCI) stock is sliding 1% to $36.64, trading well below its 52-week high of $58.78, illustrating that strong AI infrastructure demand does not automatically translate into sustained stock-market momentum.
Hewlett Packard Enterprise also expanded its collaboration with Oracle (NYSE: ORCL), which plans to deploy HPE Juniper Networking equipment across its AI data centers, potentially providing HPE with a multiyear source of networking demand.
HPE’s fiscal 2027 framework calls for revenue growth of 13% to 17% and adjusted earnings-per-share growth of 16% to 20%, with management also expecting at least $5 billion of free cash flow that year.
The iShares U.S. Technology ETF (NYSE ARCA: IYW) is up 1% to $250.69 Thursday, making HPE’s decline look more company-specific than reflective of a broad technology selloff across the sector.
The bullish case rests on HPE’s record orders and backlog potentially supporting substantial growth once supply becomes easier to secure, while the bearish case centers on shortages limiting revenue, raising costs and pressuring margins.
Investors who want exposure to the AI infrastructure theme may consider keeping HPE position sizes moderate while the market tests whether strong demand can translate into equally strong shipments and profits.
