HPE lands a $1.2 billion Vultr order and targets networking margins in the mid-to-high 20s, up from 22%

Hewlett Packard Enterprise said on Wednesday that cloud provider Vultr has placed a $1.2 billion order for AMD Helios AI racks built by HPE, the first order for the system. In a press release filed with the SEC for its Networking Investor Day, it also raised its fiscal 2027 revenue growth outlook for the networking segment to the high teens to low 20s percent, with operating margin in the mid-to-high 20s.

HPE shares were at $65.01 at 11:52 a.m. Eastern, up 5.7% from Tuesday's $61.49 close, according to Nasdaq. The day's high of $67.10 topped the $65.65 52-week high. The stock has more than tripled from its 52-week low of $19.84 and the company is valued at about $86 billion.

What HPE raised

• Fiscal 2027 networking revenue: growth of high teens to low 20s percent.
• Fiscal 2026 to 2029: networking revenue compound growth raised to high teens, with operating margin in the mid-to-high 20s from fiscal 2027 through 2029.
• Juniper cost savings: $800 million a year by the end of fiscal 2028, up from at least $600 million.
• By product through fiscal 2029: data center networking compound growth of low to high 50s percent, routing low to high 20s, campus and branch and security both high single digits.

The number behind the number

The margin target is the bigger promise. In the quarter ended July 31, HPE's 10-Q shows networking revenue of $2.893 billion and segment operating earnings of $637 million, a margin of 22.0%. For the first nine months it was 22.4%. "Mid-to-high 20s" means adding roughly 3 to 6 percentage points while revenue grows close to 20% a year. The larger savings target is part of how HPE gets there: $800 million is about 31% of the networking segment's current quarterly earnings run at an annual rate, although HPE did not say how the savings split across segments.

The Vultr order needs care too. $1.2 billion equals about 41% of one quarter of networking revenue, but a Helios rack is mostly AMD accelerators with HPE switches and software inside. HPE's server business sits in its Cloud and AI segment, which had $9.04 billion of revenue last quarter at a 17.0% operating margin. The release does not say how the order divides between segments or when it will be recognized, so it is not safe to read it as $1.2 billion of networking revenue.

Why it matters

Networking, now enlarged by the Juniper deal that closed in 2025, is HPE's highest-margin segment. The 10-Q shows its revenue up 74.9% from a year earlier, mostly from Juniper. The investor day asks shareholders to believe that growth continues on its own after the Juniper effect drops out of the year-on-year comparison, and that margins rise as it does. According to Bloomberg, Vultr, which is backed by AMD, had worked with Juniper for three years before the order. The company also said earlier that it had doubled its networking supply purchase commitments in its fiscal third quarter to get through supply constraints going into fiscal 2027.

HPE's fiscal year ends October 31, so fiscal 2027 begins in a month. For more on AI hardware spending, see our story on Jabil's outlook.

Sources: HPE Networking Investor Day release and 10-Q via SEC EDGAR; Nasdaq; Bloomberg; RTTNews. Margins are our calculation from HPE's filing. This is market information, not investment advice.