HPE Lifts Networking Revenue Outlook on AI Momentum, Accelerates Push to Strengthen Market Position
TECHWORLD ·
✦ AI Summary
HPE raised its networking business outlook on the back of rising AI-related demand and a USD 1.2 billion AI server order.
HPE said it expects networking revenue growth in fiscal 2027 to be in the high teens to low 20s percent range, and operating margin in the mid-20s to high-20s percent range.
HPE also laid out growth forecasts for networking revenue and its subsegments for fiscal 2026 through fiscal 2029.
HPE raised growth expectations for its networking business on the back of rising AI-related demand and a recent USD 1.2 billion AI server order. The company is seeing rapid growth in networking as AI demand expands, and it is being viewed as having entered a full-fledged growth phase.
On the 30th, local time, HPE held its "HPE Networking Investor Day" and announced an upward revision to its medium- to long-term growth outlook for the networking business at the event. HPE said it expects networking revenue growth in fiscal 2027 to be in the high teens to low 20s percent range, while operating margin is expected to be in the mid-20s to high-20s percent range. It also expects to outpace the market average growth rate over the next 3 years and to expand market share in data center networking, routing, and campus and branch segments.
The outlook is driven by the spread of AI data centers that deploy large-scale GPUs. As high-performance networks for high-speed data exchange between servers in AI data centers become more important, HPE is understood to have raised its growth expectations for the networking business.
The company presented its 3-year outlook covering fiscal 2026 through fiscal 2029. During this period, networking revenue is projected to grow at a compound annual rate in the high teens. Data center networking revenue is expected to grow at a compound annual rate in the low- to high-50s percent range through fiscal 2029, while routing revenue is forecast to grow at a compound annual rate in the high-20s percent range through fiscal 2029.
Revenue in the campus and branch segment and the security segment is expected to post compound annual growth rates in the high single digits, up from previous estimates. The company presented growth rates for the overall networking business as well as for each subsegment.
HPE recently secured a large AI server system order from global cloud infrastructure company Vultr, driven by demand for AI infrastructure. The order is worth USD 1.2 billion for AI server system deployment for Vultr, and the system in question is the "AMD Helios AI Rack." HPE's dedicated networking hardware and software were applied to the system.
HPE shares rose that day on the networking outlook and news of the AI server order. The closing price on the 30th of last month was USD 63.89, up 3.90% from the previous trading day. During intraday trading, the stock rose to USD 67.10, which was a 52-week high.
In January this year, HPE identified a period of reorganization in AI-centered data center and networking infrastructure and presented 9 outlooks related to data center and networking as a whole. It then expanded its portfolio through the acquisition of Juniper as a strategy to respond to market demand trends, and based on the expanded portfolio, it is pursuing increased market share, including in data center networking.
Source: TECHWORLD · Kim Hye-jin
Original: https://www.epnc.co.kr/news/articleView.html?idxno=407643
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Source: TECHWORLD
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