Quick overview

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Hewlett-Packard Enterprise shares fell after the company’s sales forecast for the current quarter did not meet high expectations for its AI server business.

According to a statement released by HPE on Thursday, the company’s revenue for the period ending in January is projected to be between $9 billion and $9.4 billion, with profits, excluding certain items, expected to range from 57 to 61 cents per share. Analysts surveyed by Bloomberg had predicted sales of $9.88 billion and an average profit of 53 cents per share.

The decline in sales for the fourth quarter of the fiscal year, which ended in October, was attributed to Chief Executive Officer Antonio Neri, who noted in an interview that their results also fell short of analysts’ projections. He explained that several agreements for servers designed to support AI workloads were postponed until 2026.

Specifically, some agreements with the U.S. government were delayed because of the federal government shutdown, and one transaction in Europe has been held up due to issues with a data center that is not yet ready.

Chief Financial Officer Marie Myers mentioned during a conference call with analysts that HPE is experiencing “substantial interest” in its AI servers, particularly from government and business clients. She noted, “We anticipate that demand will continue to be uneven because some of our largest sovereign clients are placing orders with long lead times, which may delay shipments to later dates.”

The Texas-based company is making a significant investment in networking as a key driver of future growth following the acquisition of Juniper Networks Inc. in July for approximately $13 billion.