Hewlett Packard Enterprise (NYSE: HPE) experienced a significant drop of 5% in after-hours trading on October 15, 2025, following the release of its fiscal 2026 guidance, which fell short of analysts’ expectations. The decline, which saw shares stabilize toward the week’s end, reflects investor concerns over the company’s financial outlook amid a strategic pivot toward networking and artificial intelligence (AI).
For the upcoming fiscal year, HPE projected adjusted earnings per share (EPS) to be between $2.20 and $2.40, just below Wall Street’s consensus estimate of $2.40. Moreover, the company anticipates revenue growth of 5% to 10%, significantly undercutting the 17% growth forecasted by analysts. This muted guidance has raised eyebrows, especially as HPE integrates its recent acquisition of Juniper Networks, which closed in July 2025.
HPE’s leadership has emphasized that its outlook reflects a strategic realignment toward networking and AI solutions, driven largely by the $14 billion acquisition of Juniper Networks. This integration is expected to yield at least $600 million in cost synergies by fiscal 2028, bolstering HPE’s capabilities in enterprise networking and edge computing.
Despite the potential long-term benefits of the Juniper merger, including the delivery of unified networking products across various environments, investors seem to be more focused on the immediate costs and the slower revenue growth associated with the transition.
In a bid to streamline operations and alleviate concerns, HPE has also announced plans to reduce its workforce by approximately 5%, equating to about 2,500 jobs. This move is part of a broader cost-optimization initiative linked to the Juniper acquisition, aimed at delivering $350 million in savings by fiscal 2027.
Alongside the workforce reduction, HPE’s board has authorized an additional $3 billion in share repurchases, raising the total buyback program to $3.7 billion. While some analysts believe this buyback may provide short-term support for the stock, it also underscores management’s need to reassure investors amid a challenging guidance cycle.
On a non-GAAP basis, HPE’s fiscal 2026 projections exclude various items, including around $1.63 per share in amortization of intangible assets and stock-based compensation. The company’s pro forma forecast, accounting for changes related to Juniper, anticipates compound annual revenue growth of 5% to 7% between FY25 and FY28. However, under GAAP standards, operating profit growth is projected to surge by 435% to 445% in FY26 as HPE recovers from previous write-downs.
While HPE’s strategic shift toward AI and networking holds promise for long-term growth, investor sentiment remains cautious. The recent guidance highlights the complexities of integrating a large acquisition amid macroeconomic pressures and intensifying competition in the enterprise IT landscape. Market analysts suggest that HPE’s ability to capitalize on Juniper synergies and expand its AI offerings will be critical in restoring investor confidence, with the current financial outlook potentially weighing on short-term performance.
For those following the trajectory of Hewlett Packard Enterprise, the coming months will be pivotal in determining whether the company can effectively navigate these challenges and realize its ambitious growth strategy.
