Hewlett Packard Enterprise will release its latest quarterly earnings report on December 4, 2025, after the U.S. stock market closes. Investors are focusing on the earnings flexibility and profit margin changes brought about by the integration of AI servers and Juniper Networks.
Market Forecast
Market consensus expects Hewlett Packard Enterprise to report total revenue of approximately $9.918 billion for the upcoming quarter, a year-over-year increase of about 20.16%. Adjusted earnings per share (EPS) are expected to be $0.582, up about 4.37% year-over-year. Earnings Before Interest and Taxes (EBIT) are projected to be approximately $1.147 billion, up about 27.11% year-over-year. Current forecasts do not provide specific estimates for gross margin and net income (or net margin) this quarter. If the company updates this in its earnings guidance or call, the market will adjust its models accordingly.
Currently, the company's main highlights lie in its enhanced AI infrastructure capabilities, driven by the combined forces of servers and networking. The visibility of revenue has improved thanks to AI system orders and backlog. The server segment holds the largest potential, with revenue last quarter at approximately $4.903 billion, accounting for about 53.67% of total revenue. AI-related orders and deliveries are advancing, with networking and hybrid cloud solutions supporting enterprise client bundled purchases during the same period.
Review of Last Quarter
Last quarter, Hewlett Packard Enterprise achieved a revenue of $9.136 billion, a year-over-year growth of 18.495%, with a gross margin of 29.79%. GAAP net income attributable to shareholders was about $305 million, with a net margin of 3.34%, representing a sequential growth rate of 129.05%. Adjusted EPS was $0.44, down 12% year-over-year. Management highlighted a strong demand for AI server and networking product combinations, with visibility formed by orders and backlog, while expressing caution regarding temporary pressures on profit margins.
On a segmented basis: Server revenue was about $4.903 billion; networking revenue approximately $1.732 billion; hybrid cloud revenue around $1.422 billion; financial services revenue about $887 million; and revenue from enterprise investments and other sources approximately $192 million. The server accounted for more than half, with increased AI system penetration and optimized delivery pacing being key growth factors.
Current Quarter Outlook
Momentum from AI Systems and High-Performance Servers
Investors are focused on the delivery pace for AI system orders. Based on industry feedback and multiple sell-side analyses, AI system revenue is expected to continue its high growth this quarter, with orders and backlog providing strong visibility for delivery. The incremental revenue in models will primarily appear in the server segment. With server revenue accounting for more than half last quarter, it's anticipated that revenue weight will remain high this quarter as new platform and complete machine solutions scale up.
In terms of profit margins, the high proportion of high-end GPU/accelerator cards and high-speed interconnect components in AI servers' hardware structure is unfavorable to short-term gross margins for complete machine manufacturers. Management has previously disclosed efforts to maintain profit margins in the mid-to-high single-digit range for the server business. This quarter, the market will observe whether the added value of single-machine configurations/solutions, service bundling, and economies of scale improve overall gross margins. Risks include the supply structure and price transmission of key components—if high-end component costs decrease slower than expected or delivery is skewed towards high-cost configurations, the rate of margin recovery might be slower. The corresponding alleviation approach could be through a higher proportion of software and operational and maintenance services, bundled network and storage solutions to improve per-order profits.
Networking Business and Juniper Networks Integration Synergies
The networking business is the second driving force for structural growth in this cycle. Last quarter, networking revenue was about $1.732 billion. The market generally focuses on AI data center networking demand and the scaling of core switch/router products, alongside joint bids with server-side AI cluster solutions. Once integration is complete, a more comprehensive product line and broader project coverage are expected to enhance the odds of winning large projects. - Expected synergies are mainly reflected in increased order value for end-to-end AI data center solutions, cross-selling that drives new customer expansion and existing customer upgrades, and volume procurement that reduces some material costs. The market will watch for this quarter's order growth rate and contract execution pace to validate synergy materialization. Short-term challenges lie in integration costs, channel restructuring, and overlap management of product lines, which might temporarily dilute profit margins. If this quarter's revenue is strong but expenses rise, net margin improvement might be delayed.
“Stickiness” of Hybrid Cloud and Enterprise Solutions
Hybrid cloud achieved about $1.422 billion in revenue last quarter, serving as an essential layer connecting AI computing power and enterprise data workloads. Currently, enterprise clients' demands are increasing in data security, sovereign cloud, and local/edge collaboration. The combination of hybrid cloud solutions with AI training/inference workloads is expected to bring about sustained subscription and service revenue. This quarter, the market will observe changes in renewal rates and new subscription sign-ups. If bundled sales with AI systems enhance ARPU, gross margin composition may outperform pure hardware operations, underpinning overall company gross margins. The risk lies in the cut of traditional IT budgets and the approval cycle for key projects; if macroeconomic conditions prompt customers to delay expansion, short-term growth may fluctuate. However, once AI-related production scales deeply, hybrid cloud's value in data governance and cost optimization is likely to be further demonstrated.
Focus on Cash Flow and Profit Quality
During the high growth phase of orders, the company's working capital (inventory and work in progress) might temporarily rise. This quarter, the market will closely track the recovery of operating cash flow and free cash flow. If the delivery conversion rate of AI systems improves and inventory turnover enhances, cash generation capacity will better reflect the valuation beyond the profit statement. On the expense side, R&D investment centered around AI interconnect, accelerating the interconnection stack, and system optimization is expected to persist strongly. Sales expenses may maintain a certain intensity due to large project expansions, with marginal changes in expense ratio being offset by economies of scale. As consensus has not disclosed specific forecasts for net income or net margin this quarter, assessing profit quality this quarter will rely more on the realization of EBIT and EPS. EPS is expected to show a small year-over-year increase, implying the market assumes a balance in gross/margin rate trade-offs, with greater EPS elasticity if gross margin improvement exceeds expectations.
Analyst Opinions
Over the past six months, bullish opinions have prevailed. Many institutions have mentioned the performance flexibility brought by AI and networking synergies, particularly following Juniper Networks' consolidation, which positions revenue scale and product structure to better capture enterprise-level AI data center construction cycles.
Morgan Stanley upgraded Hewlett Packard Enterprise's rating to a more positive range against the backdrop of the completed acquisition, indicating more sustainable growth in AI and networking segments post-integration. They project an 18% increase in EPS for fiscal year 2026 compared to previous consensus expectations, with EPS potentially reaching $2.70–3.00 by fiscal year 2027. Their core logic is the resilient demand for AI-related hardware and services, accelerated large order execution through network product and solution bundling, with orders and backlog providing strong revenue visibility for the next two to three quarters.
Evercore ISI believes that sustained high computing power demand from upstream accelerator platforms forms positive feedback for infrastructure investment in enterprise AI training and inference, benefiting Hewlett Packard Enterprise alongside peers. They emphasize that the current risk/reward profile is attractive within the investable cycle, focusing on subsequent improvements in gross margins and the digestion of integration period expenses.
Some independent analysts also highlight the quarter-over-quarter improvements in AI-related orders and revenue last quarter and the scale of uncompleted AI system revenue, laying the foundation for continued growth in subsequent quarters. They also caution about the need for server segment profit margins to gradually recover to match the profit elasticity expectations brought by revenue growth.
Overall, institutional perspectives are mostly bullish, with the focus on this quarter's revenue realization and gross margin recovery path driven by AI and networking. If approximately $9.9 billion in revenue and adjusted EPS of $0.582 for this quarter is achieved, along with clearer guidance on AI systems, network synergies, and expense rate improvements, it will further validate the market's upward revision space for fiscal year 2026's profitability.