Hewlett Packard Enterprise reported record second-quarter results on Monday, sending shares up 36% in extended trading. The company is accelerating its long-term financial goals by two years as expansion of AI data centers fuels demand.

HPE competes with Dell and Super Micro Computer. Customers are increasingly buying its servers and networking products to power AI applications like ChatGPT, amid higher memory chip prices.

CFO Marie Myers said HPE is managing the dynamic pricing environment through long-term agreements extending into 2027, and has been "agile" in passing on cost increases to customers, with some price adjustments starting late last year.

U.S. tech giants including Alphabet and Amazon plan to spend over $700 billion on AI infrastructure this year, boosting demand for suppliers like HPE.

HPE raised its fiscal 2026 revenue growth outlook to between 29% and 33%, up from the prior 17% to 22%. It now expects annual networking segment revenue growth of 72% to 75%, a sharp increase from 68% to 73%.

The company reported record revenue growth of 40% to $10.68 billion, beating analysts' estimates of $9.79 billion. Adjusted earnings per share of 79 cents topped expectations of 53 cents.

"The strength of the quarter was largely driven by the performance of our traditional server business, which is really focused on enterprise customers," Myers said. She noted that enterprises significantly adopted agentic AI as a core workload this quarter.

HPE's revised fiscal 2026 ranges for adjusted EPS and free cash flow are higher than what it projected for fiscal 2028. It raised annual adjusted EPS to a range of $3.35 to $3.45, compared with an earlier projection of $2.30 to $2.50. It had anticipated adjusted EPS of at least $3.00 for fiscal 2028.

The company reported more than $6.3 billion in total AI backlog, with 61% from government and large business clients.

"We do expect to ship and convert significantly more AI revenue in the back half of the year. We expect that actually to peak in Q4," Myers said.

HPE also introduced a fiscal 2027 growth framework, expecting revenue growth of 8% to 12%, above estimates of 5.8%.

Separately, the company appointed Elliott Investment Management partner Christopher Hsu to its board under their cooperation agreement.