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New Delhi, India, December 5- Hewlett Packard Enterprise (HPE) reported lower-than-expected revenue for the first quarter forecast as delays in AI server shipments weighed on its outlook. The company confirmed that most AI-related deals will now ship in the second half of the fiscal year, creating a temporary slowdown in growth.
HPE announced its fourth-quarter results on Thursday, revealing total revenue of $9.68 billion. This figure fell short of analysts’ estimates of $9.94 billion. The company also projected first-quarter revenue between $9 billion and $9.4 billion, which is below Wall Street’s average expectation of $9.9 billion.
The decline is largely due to uneven demand for AI servers. These systems, optimized for advanced workloads and powered by high-end Nvidia processors, have become a key growth driver for HPE. However, customers, including large sovereign clients, are placing orders with extended lead times. This shift means shipments will occur later in the year, according to Chief Financial Officer Marie Myers.
Myers explained that the company continues to experience “lumpiness” in AI server revenue. She noted that while demand remains strong, timing issues have created a sequential decline for the upcoming quarter. HPE expects the majority of AI deals to be fulfilled in the latter half of the year, which should help offset the current slowdown.
The company’s server revenue for the quarter ended October 31 dropped 5% to $4.5 billion. This decline reflects the timing of AI server shipments and lower-than-expected spending from U.S. federal agencies. Revenue from HPE’s hybrid cloud segment also fell 12% to $1.41 billion, signaling broader challenges in cloud-related services.
Despite these short-term hurdles, HPE raised its fiscal 2026 adjusted earnings per share forecast. The company now expects earnings between $2.25 and $2.45, up from its previous projection of $2.20 to $2.40. This increase suggests confidence in long-term growth, driven by AI infrastructure and hybrid cloud solutions.
Shares of HPE fell more than 9% in extended trading following the announcement. Investors reacted to the weaker revenue outlook and the delay in AI server shipments, which have been a major focus for technology companies amid the global AI boom.
AI servers are critical for running large-scale machine learning models and supporting enterprise AI applications. HPE has positioned itself as a key player in this space, offering systems that integrate advanced GPUs and optimized architectures. However, the company’s experience highlights the complexity of scaling AI infrastructure, especially when dealing with large government and enterprise contracts.
The delay in shipments underscores a broader trend in the technology sector. Many companies are facing supply chain challenges and extended procurement cycles for AI hardware. These factors can create volatility in quarterly results, even as long-term demand remains robust.
HPE’s leadership expressed optimism about the second half of the year. They expect strong execution on pending AI deals and continued momentum in hybrid cloud services. The company also plans to focus on operational efficiency and cost management to navigate near-term pressures.
Industry analysts believe that while the short-term outlook is cautious, HPE’s strategy aligns with growing enterprise investment in AI. Organizations worldwide are accelerating adoption of AI-driven solutions, which will require scalable and secure infrastructure. This trend positions HPE to benefit from a surge in demand once shipment schedules normalize.
For now, the company faces the challenge of balancing investor expectations with operational realities. The next few quarters will be critical as HPE works to deliver on its AI commitments and stabilize revenue growth.
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