HPE reports Oracle networking deal at gigawatt scale after strong Q3

HPE expands Oracle networking relationship

Hewlett Packard Enterprise (HPE) ended another strong quarter with a multiyear supply agreement with Oracle.

Oracle has used Juniper Networks networking equipment for more than a decade. It will now work with Juniper’s parent company, HPE, using routing and switching platforms such as PTX and MX across data center and edge networks supporting Oracle Cloud Infrastructure (OCI). The agreement also includes HPE’s latest QFX switches, which are designed to provide high-density connectivity for AI backend networks.

During HPE’s third-quarter earnings call, CEO Antonio Neri described the Oracle agreement as “an expansion of what Juniper used to do, but now we’re doing at gigawatt scale.” He presented the deal as validation of HPE’s combined networking portfolio and said it could serve as a reference for other large deployments.

“We have a scalable set of products that deliver the performance with the AI capabilities that now everybody is looking for to drive these self-driving kind of operations,” Neri told investors. “As these gigawatts and gigawatts of infrastructure get deployed, which we think by the end of the decade will be over 270 gigawatts, you have to connect all of them. Therefore, at the end of that pipe, you need a router with that level of capabilities.”

Networking revenue rises sharply

The Oracle agreement came as HPE reported quarterly revenue of $12.2 billion, a 35 percent year-on-year increase.

Revenue from HPE’s networking portfolio rose 74.9 percent year on year to $2.9 billion. Campus and branch revenue increased 31 percent to $1.4 billion, while data center networking revenue grew 112 percent to $1.4 billion.

Routing recorded the largest year-on-year increase among HPE’s networking offerings, rising 270 percent to $788 million. Security revenue reached $281 million, up 75.6 percent from the same period a year earlier.

Chief Financial Officer Marie Myers said order momentum was strongest in data center switching and routing, where orders increased by a high-double-digit percentage. Campus and branch orders grew at a low-teens rate. Myers added that AI networking was generating particularly strong demand, with related orders reaching a record $700 million in the third quarter, representing a triple-digit increase.

Cloud and AI division also grows

Revenue from HPE’s Cloud & AI division increased by more than 25 percent year on year to $9 billion. Server revenue rose 35.3 percent to $6.8 billion, supported by strong demand. Storage revenue increased 10 percent to $1.3 billion.

Neri said HPE booked more orders in the quarter than in any previous quarter in its history.

“Orders were ahead of revenue, demonstrating the differentiation of our self-driving networks and the versatility across multiple cloud deployment models. Routing and data center switching demand accelerated in the quarter, with orders substantially ahead of revenue and our backlog at its highest ever,” Neri said. “Our backlog reflects strong customer demand from hyperscalers and neoclouds for our routers, switching, and AI-driven operation software as they continue to increase their AI cloud capex infrastructure investments.”

HPE raised its fiscal 2026 revenue growth forecast to between 34 percent and 37 percent, up from its previous forecast of between 9 percent and 33 percent.

“Growth in our backlog shows strong customer demand is running ahead of available supply,” Neri added. “We expect to convert more orders into revenue in Q4, which gives us even greater confidence in sustaining our networking growth in fiscal 2027.”