HPE Shares Plunge 8% on Disappointing Fiscal 2026 Outlook

Shares of Hewlett Packard Enterprise (HPE) experienced a sharp decline in premarket trading Thursday, tumbling 8% after the company’s fiscal year 2026 guidance fell short of analyst expectations. The revised outlook has sparked concerns about HPE’s growth trajectory, particularly in the face of its recent strategic shifts and major acquisition.

During a meeting with analysts, HPE projected adjusted earnings per share (EPS) for FY26 to be in the range of $2.20 to $2.40. This figure contrasts with the consensus estimate of $2.40 EPS projected by analysts surveyed by LSEG. The revenue growth forecast, anticipated to be between 5% and 10%, also lagged Wall Street’s more optimistic projections of 17% growth.

CEO Antonio Neri addressed these concerns on CNBC’s “Squawk Box”, characterizing the FY26 guide as a “pro forma guide.” He emphasized that this forward-looking statement incorporates the integration timeline of Juniper Networks following its acquisition. “We reset the baseline based on the fact that we only include the four months of Juniper in our 2025 results,” Neri clarified. “And so we wanted to be very transparent of the fact that the growth rate will be in that, you know, high single digits.” This approach aims to provide a realistic picture of HPE’s performance, accounting for the complexities of integrating a large acquisition.

HPE’s strategic recalibration involves a pronounced focus on networking technologies, capitalizing on the Juniper Networks acquisition to enhance its offerings. The company also seeks to leverage its artificial intelligence (AI) capabilities, targeting both governmental (“sovereign”) and enterprise clients. The acquisition of Juniper Networks is seen as pivotal, providing HPE with a robust portfolio of cloud-native, AI-driven networking solutions poised to compete in a rapidly evolving market. The strategic rationale is that combining HPE’s existing strengths with Juniper’s expertise will create a synergy that drives innovation and market share gains. Specifically, HPE plans to leverage Juniper’s AI-powered networking platforms to provide customers with greater automation, security, and insights into their network performance, potentially leading to cost savings and improved operational efficiency.

Neri underscored the significance of these changes in a statement. “In HPE’s new chapter, our strengthened portfolio will create more profitable growth, increasing capital return opportunities that deliver even greater value to our shareholders,” he stated, highlighting the company’s confidence in its long-term prospects.

Further demonstrating its commitment to shareholder value, HPE’s board approved an additional $3 billion in share buybacks, boosting the total share repurchase plan to $3.7 billion. This signals management’s belief that the company’s stock is undervalued and represents an attractive investment opportunity.

Earlier in March, alongside its fiscal first-quarter earnings report, HPE announced a workforce reduction of approximately 5%, affecting around 2,500 employees. This move reflects a broader effort to streamline operations and improve efficiency in the face of changing market conditions and strategic priorities.

Analysts are now closely watching how HPE executes its integration strategy with Juniper Networks and whether its AI-focused initiatives will translate into tangible revenue growth. The company’s ability to successfully navigate these transitions will be critical in achieving its long-term financial targets and regaining investor confidence.