HPE lifts networking outlook on AI demand & Juniper savings

HPE has raised its fiscal 2027 revenue outlook for its networking business, positioning the unit as a larger contributor to growth as AI-related demand expands.

The revised forecast calls for networking revenue growth in the high-teens to low-20s percentage range in fiscal 2027, with operating margins in the mid-to-high 20s percentage range. HPE also expects high-teens compound annual revenue growth for the segment from fiscal 2026 to fiscal 2029.

The update came as HPE outlined its strategy to gain share in data centre networking, routing, and campus and branch networks, arguing that demand from enterprises, service providers, hyperscalers, and newer cloud providers is reshaping the market.

HPE also raised its cost-savings target related to Juniper Networks. It now expects USD $800 million in annual run-rate savings by the end of fiscal 2028, up from a previous target of at least USD $600 million.

Alongside the outlook, HPE disclosed a USD $1.2 billion order from cloud infrastructure provider Vultr for AMD Helios AI Rack by HPE systems. The company said it was the first order for the new system and that it included HPE networking hardware and software.

Growth areas

Management outlined four main areas for expansion in the networking portfolio: data centre networking, routing, campus and branch, and security.

In data centre networking, HPE expects revenue to grow at a low-to-high 50s percentage compound annual rate through fiscal 2029. It tied that forecast to changes in data centre architecture as AI workloads drive demand for network infrastructure that can support large clusters of graphics processing units.

For routing, HPE expects revenue to grow at a low-to-high 20s percentage compound annual rate through fiscal 2029. AI deployments are increasing routing demand at the edge and across data centres as customers connect users, devices, branch sites, and distributed AI clusters.

In campus and branch networking, HPE forecast high single-digit percentage compound annual growth through fiscal 2029. It said the segment was entering a multi-year modernisation cycle tied to the shift to Wi-Fi 7, and that the combination of Aruba and Juniper Mist products would support that effort.

Security is also expected to grow at a high single-digit percentage compound annual rate through fiscal 2029. HPE said the convergence of networking and security is creating demand for products that combine secure access service edge, network access control, firewalls, identity-based policy enforcement, and AI-led operations.

Investor focus

Networking has become a key focus for investors as large technology companies position themselves around AI infrastructure spending. While HPE is best known for servers, storage, and hybrid cloud products, it is signalling that networking will make up a larger share of growth over the next several years.

HPE also expects to outgrow the wider market and gain share in data centre networking, routing, and campus and branch over the next three years. That ambition reflects a broader industry race as established suppliers and newer entrants compete for AI-linked infrastructure spending.

To support demand and ease supply pressures, HPE previously doubled its quarter-on-quarter networking supply purchase commitments in the third quarter of fiscal 2026. It said the move was intended to prepare for stronger demand entering fiscal 2027.

Rami Rahim, Executive Vice President, President and General Manager, Networking, HPE, described the company's view of the market shift. "AI is reshaping the technology stack, making the network more strategic and driving significant new demand from enterprises and service providers," Rahim said.

He added: "HPE is positioned to capture that demand through an integrated networking portfolio, expansive go-to-market scale, and greater cross-sell capabilities. Together, these advantages strengthen our ability to deliver sustainable, profitable growth and create long-term shareholder value."

The figures show how closely HPE is tying its networking plans to AI-related spending, while seeking to demonstrate that the Juniper integration can improve margins through higher cost savings and broader product reach. Networking operating margins are expected to remain in the mid-to-high 20s percentage range from fiscal 2027 through fiscal 2029.