Hewlett Packard Enterprise shares rallied nearly 29% in premarket trading Tuesday after the company pulled forward its long-term financial targets by two years, citing surging demand for AI servers.
HPE competes with Dell Technologies and Super Micro Computer in the enterprise server market. The company is seeing sustained buying from large enterprises looking to lock in supply ahead of rising memory chip prices.
Hyperscalers like Alphabet and Amazon are expected to invest more than $700 billion in AI infrastructure this year, fueling demand for HPE's server and networking products.
On Monday, HPE raised its fiscal 2026 revenue growth forecast to 29% to 33%, up from 17% to 22%. It also boosted its networking segment growth outlook to 72% to 75% from 68% to 73%.
Morgan Stanley analysts noted HPE is benefiting from the same pricing dynamic as Dell: customers are absorbing higher server prices with little evidence of demand destruction.
Shares of Dell and Super Micro Computer rose 3% and 5%, respectively.
CFO Marie Myers told Reuters a key shift this quarter is the growing adoption of agentic AI as a core workload by enterprise customers. HPE's revised fiscal 2026 adjusted EPS and free cash flow ranges are higher than what it projected for fiscal 2028.
HPE trades at a 12-month forward price-to-earnings ratio of 15.93, compared with Dell's 24.14 and Cisco's 25.56.