Hewlett Packard Enterprise shares fell 5.6% in pre-market trading to $48.93 on Thursday, extending declines after the company reported strong third-quarter results but warned of margin compression in the fourth quarter.
The Palo Alto-based technology company posted adjusted earnings per share of $1.11, exceeding analyst expectations of $0.93, while revenue rose 34% year-over-year to $12.21 billion, surpassing the forecast of approximately $11.9 billion. Non-GAAP gross margin reached a record 40%, underscoring HPE’s operational efficiency in its core markets.
Order intake grew 42% year-over-year, outpacing the 34% revenue increase and swelling the backlog. However, management cautioned that operating margins may moderate in the coming quarter due to a shift toward higher-margin AI systems and evolving pricing dynamics. Supply chain bottlenecks, particularly in DDR5, DDR4, NAND flash, and wafer capacity, continue to constrain the company’s ability to convert orders into revenue.
HPE’s stock remains below its 52-week high of $64.25 but well above the low of $19.84 recorded last year. Deutsche Bank upgraded its price target to $68 from $62 while maintaining a Buy rating. The broader U.S. equity market showed modest gains, with the S&P 500, Dow Jones, and Nasdaq trading higher.
The company also announced an expanded partnership with Oracle to deploy HPE Juniper Networking solutions across Oracle’s AI data centers, signaling continued demand for high-performance infrastructure amid the AI infrastructure build-out.
