HPE Set to Report Q3 Earnings: What's in Store for the Stock?

Hewlett Packard Enterprise HPE is scheduled to report third-quarter fiscal 2025 results on Sept. 3.

For the third quarter of fiscal 2025, management expects non-GAAP earnings per share between 30 cents and 42 cents. The consensus mark is pegged at 43 cents per share, indicating a decrease of 14% from the prior-year quarter’s reported figure. The estimate has been revised downward by a penny over the past 30 days.

HPE’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing the same on one occasion, delivering an average surprise of 5.9%.

For the third quarter of fiscal 2025, HPE expects revenues between $8.2 billion and $8.5 billion. The Zacks Consensus Estimate is pegged at $8.78 billion, suggesting growth of approximately 13.9% from the year-ago quarter’s reported figure.

Hewlett Packard Enterprise Company Price and EPS Surprise

Hewlett Packard Enterprise Company price-eps-surprise | Hewlett Packard Enterprise Company Quote

Factors to Influence HPE’s Q3 Results

Hewlett Packard Enterprise’s fiscal third-quarter performance is expected to have been supported by rising demand in Artificial Intelligence (AI) and improving networking market conditions. HPE’s AI-driven networking portfolio is likely to have contributed to the growth of its Intelligent Edge services across campus and branch segments. Growth in Intelligent Edge is likely to have been driven by recovery in the networking market, Wi-Fi 7 adoption, and enhancements in Aruba Networking Central.

AI continues to be a key growth catalyst for HPE. The company exited the second quarter with $3.2 billion of AI systems backlog and expects a large AI system deployment in the third quarter. HPE’s AI systems and sovereign AI cloud offerings are likely to have been driven by strong demand from customers, particularly through HPE Private Cloud AI, which is expected to have boosted the company’s top line.

The increasing adoption of the Aruba Edge Services Platform and HPE GreenLake is expected to have driven Hewlett Packard Enterprise’s revenues in the to-be-reported quarter. GreenLake momentum is expected to remain strong during the reported quarter, driven by subscription growth and an expanding customer base, which reached about 42,000 customers in the second quarter. The HPE GreenLake solution is likely to have benefited from the company’s effort to simplify its cloud strategy by including all related products in the hybrid cloud segment. This initiative is expected to have simplified the customer adoption of the solution and added to the top line.

Hewlett Packard Enterprise has been benefiting from persistent growth in sales of its accelerator processing unit, primarily driven by rising demand for HPE Cray EX, Cray XT, HPE ProLiant Gen11 AI-optimized servers and the initial rollout of Gen12 servers, which began shipping during the second quarter.

However, HPE continues to navigate a complex macro environment, including tariffs, trade policy changes and geopolitical uncertainty, which is likely to have impacted overall financial performance in the third quarter. Moreover, enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues.

Earnings Whispers for HPE Stock

Our proven model does not conclusively predict an earnings beat for HPE this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Though HPE carries a Zacks Rank #2 at present, it has an Earnings ESP of -2.33%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Micron Technology MU has an Earnings ESP of +1.37% and flaunts a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Micron Technology shares have surged 41.5% year to date. Micron Technology is set to report its fourth-quarter fiscal 2025 results on Sept. 23.

Broadcom AVGO currently has an Earnings ESP of +1.16% and a Zacks Rank #2 at present.

Broadcom shares have gained 28.3% year to date. Broadcom is slated to report its third-quarter fiscal 2025 results on Sept. 4.

American Eagle Outfitters AEO has an Earnings ESP of +7.69% and a Zacks Rank #3 at present. 

American Eagle Outfitters shares have lost 22.4% year to date. American Eagle Outfitters is slated to report its second-quarter fiscal 2025 results on Sept. 3.

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This article originally published on Zacks Investment Research (zacks.com).

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