New Delhi, India, December 5- Hewlett Packard Enterprise (HPE) reported weaker quarterly revenue as delays in AI server sales affected its first-quarter forecast. The company confirmed that most AI-related deals are now expected to ship in the second half of the fiscal year, creating a temporary slowdown in growth.
HPE released its fourth-quarter results on Thursday, showing total revenue of $9.68 billion. This figure fell short of analysts’ estimates of $9.94 billion. Looking ahead, the company projected first-quarter revenue between $9 billion and $9.4 billion, below Wall Street’s expected $9.9 billion.
The decline largely stems from uneven demand for AI servers, which are powered by high-end Nvidia processors and designed for advanced workloads. These systems have become a key growth driver for HPE, but customers, including large sovereign clients, are placing orders with extended lead times. As a result, shipments will occur later in the year, according to Chief Financial Officer Marie Myers.
Myers explained that HPE continues to see “lumpiness” in AI server revenue. While demand remains strong, timing issues have caused a sequential decline for the upcoming quarter. She added that fulfilling most AI deals in the second half of the year should help offset the current slowdown.
Server revenue for the quarter ended October 31 fell 5% to $4.5 billion. The drop reflects delayed AI shipments and lower-than-expected spending from U.S. federal agencies. Revenue from HPE’s hybrid cloud segment also fell 12% to $1.41 billion, signaling broader challenges in cloud-related services.
Despite these short-term setbacks, HPE raised its fiscal 2026 adjusted earnings per share forecast. The company now expects earnings between $2.25 and $2.45, up from its prior projection of $2.20 to $2.40. This increase suggests confidence in long-term growth driven by AI infrastructure and hybrid cloud solutions.
Shares of HPE fell more than 9% in after-hours trading following the announcement. Investors reacted to the weaker revenue outlook and delayed AI server shipments, which have become central to technology companies amid the global AI boom.
AI servers play a critical role in running large-scale machine learning models and supporting enterprise AI applications. HPE has positioned itself as a key player in this space, offering systems that integrate advanced GPUs and optimized architectures. However, the company’s experience highlights the challenge of scaling AI infrastructure, particularly when dealing with large government and enterprise contracts.
The delay in shipments also reflects a broader trend in the technology sector. Many companies are facing supply chain disruptions and longer procurement cycles for AI hardware. Such factors can create volatility in quarterly results, even as long-term demand for AI technology remains strong.
HPE’s leadership expressed optimism about the second half of the fiscal year. They anticipate strong execution on pending AI deals and continued growth in hybrid cloud services. The company plans to focus on operational efficiency and cost management to navigate short-term pressures.
Industry analysts note that while the short-term outlook is cautious, HPE’s strategy aligns with growing enterprise investment in AI. Organizations worldwide are accelerating adoption of AI-driven solutions, which require scalable and secure infrastructure. Once shipment schedules normalize, HPE stands to benefit from a surge in demand.
For now, HPE must balance investor expectations with operational realities. The next few quarters will be critical as the company works to deliver on AI commitments and stabilize revenue growth.
In summary, HPE’s weaker quarterly revenue underscores the challenges of timing in AI server sales, yet the company remains optimistic about long-term growth. The delay is a temporary hurdle, and experts expect HPE to regain momentum as AI adoption continues to rise globally.
