HPE stock sinks 9% on revenue miss and weak server numbers

Hewlett Packard Enterprise (HPE) experienced a notable drop in its stock price, falling by 5% on Friday following the company’s announcement of fourth-quarter earnings that did not meet market expectations. Despite reporting a revenue increase of 14% year-over-year, reaching $9.68 billion, this figure was below the anticipated $9.94 billion forecast by analysts from LSEG. The company’s server division reported revenue of $4.46 billion, marking a 5% decrease from the previous year’s $4.68 billion. This performance also fell short of analyst expectations, which had predicted $4.58 billion for the segment. During the earnings call, CFO Marie Myers addressed the disappointing numbers, highlighting that the shortfall was influenced by delays in artificial intelligence service shipments and a reduction in government spending. Despite these challenges, Myers noted a positive trend in server order growth, particularly in both traditional and AI-related offerings, stating that demand significantly exceeded revenue during this period. It is important to note that server revenue also saw a 10% decline compared to the third quarter. On a positive note, HPE exceeded earnings expectations with adjusted earnings of 62 cents per share, surpassing the 58 cents per share forecasted by LSEG. Looking ahead, the company anticipates first-quarter revenue for fiscal 2026 to fall between $9 billion and $9.4 billion, which is lower than the $9.87 billion expected by analysts from FactSet.