HPE Earnings Hurt by Server Revenue Slide
HPE earnings reported growth but warned that delayed AI server deals and server revenue decline pressured guidance and knocked shares lower after-hours.
KEY TAKEAWAYS
- HPE reported a mid-single-digit decline in core server revenue.
- Management blamed delayed AI deployments for pushing larger server deals later.
- Shares dropped nearly 5% after-hours following a cautious January-quarter revenue outlook.
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Hewlett Packard Enterprise reported solid fiscal fourth-quarter 2025 results on Dec. 4, 2025, but its earnings release showed a mid-single-digit decline in core server revenue and a cautious January-quarter revenue outlook tied to delayed AI deployments, prompting an after-hours share drop.
Quarter Results and Guidance
The company said in a press release that for the quarter ended Oct. 31, 2025, it posted year-over-year total revenue growth and improved profitability. The release noted the completion of the Juniper Networks acquisition within fiscal 2025, which has now moved into integration and execution.
HPE provided reported revenue guidance for the fiscal first quarter ending Jan. 31, 2026, describing the outlook as cautious due to slower enterprise IT spending and elongated deal cycles. Management called fiscal 2025 a transformative year and said it expects to raise outer-year guidance for FY26, identifying AI, cloud, and networking as medium-term growth pillars.
Server Revenue Decline and AI Delays
HPE’s Compute business underperformed, with core server revenue declining year over year and operating-margin compression in the segment weighing on quarterly momentum. Management said customer delays in developing AI products are pushing larger AI server deals later, slowing the timing of related sales rather than signaling cancellations. These delays have skewed bookings and tempered near-term sales momentum while leaving the longer-term pipeline intact.
Investors reacted by sending HPE shares down nearly 5% in after-hours trading as they assessed the cautious January-quarter guidance and pressure in the Compute segment. The company emphasized that scaling AI and cloud businesses and integrating Juniper will offset timing headwinds, framing near-term volatility in AI server orders as a timing issue rather than diminished long-term demand.
