HPE Raises 2027 Outlook as AI Infrastructure Demand Drives Record Revenue

Hewlett Packard Enterprise (HPE) has raised its financial projections for fiscal year 2027, citing a massive surge in demand for AI-driven infrastructure. The outlook adjustment follows a record-breaking third quarter that underscores the company's successful pivot toward the high-compute requirements of the AI era.

In the third quarter, HPE reported revenue of $12.2 billion, a 34% increase year-over-year. Growth was led by the Cloud and AI segment, where revenue rose 25.4% to $9.0 billion, bolstered by a 35.3% jump in server revenue to $6.8 billion. Networking performance was particularly aggressive, with revenue reaching $2.9 billion—a 74.9% increase—while routing revenue skyrocketed 270% to $788 million. CFO Marie Myers attributed the performance to robust demand across the portfolio and disciplined execution.

The AI Infrastructure Pivot

This growth is driven by the systemic modernization of data center networking and routing. As enterprises deploy large language models and complex AI workloads, the physical infrastructure required to move and process data at scale has become a critical bottleneck. HPE is positioning its portfolio to address these specific needs, resulting in an order backlog that has reached record levels.

President and CEO Antonio Neri stated that AI is evolving into a multi-year growth driver for the company, noting that HPE's differentiated portfolio allows it to capture this opportunity at scale. This shift marks a transition from general-purpose computing toward specialized, AI-optimized hardware environments.

Long-Term Financial Implications

By raising its 2027 outlook, HPE is signaling that the AI boom is providing sustainable financial momentum beyond the initial rush for chips. The company now projects revenue growth of 13% to 17% and non-GAAP EPS growth of 16% to 20% for fiscal 2027. Additionally, HPE has set a free cash flow target of at least $5 billion for the same period.

For the broader hardware market, these figures suggest a sustained multi-year investment cycle. The record backlog indicates that the demand for the physical layer of AI—the servers and switches that house the GPUs—is not a short-term spike but a fundamental restructuring of corporate data centers.

Future Outlook

Investors and industry analysts will now be watching whether HPE can maintain this pace of execution as it works through its record backlog. While the current trajectory is strong, the company's ability to meet these aggressive 2027 targets will depend on its capacity to scale production and navigate the ongoing volatility of the global AI supply chain.