HPE Shares Rise 4.5% After Networking Outlook Upgrade and $1.2 Billion Vultr AI Deal

Hewlett Packard Enterprise (NYSE:HPE) shares rose 4.5% on Wednesday after the company raised its long-term networking revenue outlook and announced a $1.2 billion artificial intelligence systems agreement with cloud provider Vultr.

The Vultr agreement represents the first major order for AMD Helios AI Rack by HPE systems. The infrastructure is scheduled to be deployed across Vultr’s U.S. data centres and will include purpose-built HPE scale-up switching technology.

Each rack will integrate 72 AMD Instinct MI455X GPUs as Vultr expands the infrastructure supporting its AI cloud services.

The announcement was accompanied by updated financial targets presented at HPE’s Networking Investor Day, covering the company’s Data Center Networking, Routing, and Campus & Branch operations.

Vultr Places $1.2 Billion AI Systems Order

Under the $1.2 billion agreement, Vultr will deploy AMD Helios AI Rack by HPE systems across its data centres in the United States.

The order is the first major customer agreement for the systems and combines AMD’s AI computing hardware with HPE networking infrastructure.

Each rack will incorporate 72 AMD Instinct MI455X GPUs alongside HPE scale-up switching designed for AI infrastructure.

The agreement expands HPE’s involvement in infrastructure used to support AI workloads as cloud providers increase deployments of accelerated computing systems.

HPE Raises Fiscal 2027 Networking Growth Forecast

HPE also increased its expectations for near-term growth in its Networking segment.

The company now projects Networking revenue growth in the high-teens to low-20s percentage range in fiscal 2027, representing an increase from its previous guidance.

Management expects growth across the broader networking portfolio, including Data Center Networking, Routing, and Campus & Branch.

HPE’s updated outlook also sets out different longer-term growth expectations across the individual networking businesses through fiscal 2029.

Data Center Networking Revenue Targeted for 50%-Range CAGR

HPE expects Data Center Networking revenue to grow at a compound annual growth rate ranging from the low-50s to high-50s percentage range through fiscal 2029.

Routing revenue, meanwhile, is projected to increase at a CAGR ranging from the low-20s to high-20s percentage range over the same period.

The company expects its Networking segment to maintain operating margins in the mid-to-high 20s percentage range from fiscal 2027 through fiscal 2029.

The forecasts reflect HPE management’s expectations for demand across data centre, routing and enterprise networking infrastructure.

HPE Raises Juniper Networks Cost Synergy Target to $800 Million

HPE also increased its cost synergy target related to its acquisition of Juniper Networks.

The company now expects to generate $800 million in annual run-rate cost savings by the end of fiscal 2028.

That represents a 33% increase from HPE’s original target of at least $600 million in annual run-rate savings.

The Juniper acquisition forms part of HPE’s expansion of its networking operations, including infrastructure designed to support AI-related workloads.

HPE Sees AI Increasing Importance of Networking Infrastructure

HPE said artificial intelligence workloads are increasing demand for networking infrastructure among enterprises and service providers.

Rami Rahim, executive vice president and president of Networking at HPE, said the development of AI infrastructure is changing the role of networking within technology systems.

“AI is reshaping the technology stack, making the network more strategic and driving significant new demand from enterprises and service providers,” Rahim said.

The company’s updated targets and the Vultr agreement come as HPE expands its networking portfolio and infrastructure offerings for AI computing deployments.

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