Demand for AI infrastructure, networking, and servers has propelled HPE to report a record quarter, showcasing substantial growth during their third-quarter earnings call. According to HPE CEO Antonio Neri, AI has evolved into a multi-year growth driver, prompting increased demand across their entire portfolio. This surge in interest has led to booking more orders in this quarter than any other in the company’s history, resulting in a backlog that bodes well for Q4 revenue conversion.
During this quarter, HPE reported a revenue of $12.2 billion, marking a 34% rise from the previous year. Notably, networking products showed record booking and revenue levels. Looking toward fiscal year 2027, CFO Marie Myers forecasts a growth of 13%-17% in networking revenue and 14%-18% in cloud and AI revenues.
Neri emphasized the record revenue for campus and branch networking, attributed to customers modernizing their aging infrastructure and adopting AI-driven network operations. The demand for routing and data center switching also saw significant acceleration, with orders well surpassing revenue, leading to historically high backlog levels.
However, supply constraints, particularly concerning memory types like DDR5, DDR4, and NAND flash, remain an issue. Neri acknowledged these difficulties, highlighting that partnerships are crucial for securing long-term supply agreements, and efforts are afoot to offer alternative product configurations and improved supply forecasting to clients.
The growth in AI-driven networks significantly contributes to HPE’s expanded results. As enterprises transition from AI pilot projects to full-scale production deployments, demand for infrastructure capable of handling agentic AI workloads and inferencing has surged, with AI system orders exceeding $2.4 billion—a remarkable increase over the previous quarter.
The server business also plays a critical role in HPE’s growth trajectory, with robust demand for traditional servers. Neri noted that customers are increasingly interested not only in AI workload compatibility but also how new AI applications can redefine their business workflows.
This situation isn’t solely isolated to HPE. Competitor Dell reported a staggering $95 billion AI server backlog, indicating a broader infrastructure challenge as demand for traditional CPU-based servers continues to outpace supply.
For further details on AI advancements and infrastructure developments, visit links related to Artificial Intelligence and Networking.
