Full Breakdown
HPE Raises Networking Outlook and Secures $1.2 B AI Rack Deal with Vultr
By Drooid · · How we work
Core Announcement
On September 30, Hewlett Packard Enterprise (HPE) announced two linked developments during its networking investor day. The company disclosed a $1.2 billion order from cloud infrastructure provider Vultr for AMD-powered AI server racks and simultaneously upgraded its long-term revenue growth outlook for the networking segment.
Deal Details and Forecasts
The Vultr contract is the first major purchase of HPE’s AMD Helios AI Rack, a rack-scale system built for training trillion-parameter models and high-volume inference. Each rack combines 72 AMD Instinct MI455X GPUs, AMD EPYC CPUs, Pensando Vulcano AI networking cards, ROCm software, six HPE Juniper QFX5252 Ethernet switch trays, liquid-cooling, and deployment services. The systems will be installed across Vultr’s U.S. data centers.
HPE’s management projected that networking segment revenue will grow at a compound annual growth rate (CAGR) in the high-teens percent range from fiscal 2026 through fiscal 2029, a substantial increase from the prior 5-7 % forecast for fiscal 2025-2028. For fiscal 2027, the outlook was lifted to the high-teens to low-20s % range, up from an earlier 14-17 % projection. Sub-segment targets include data-center networking growth in the low-to-high 50s % range and routing growth in the low-to-high 20s % range. Operating margins for the networking segment are expected to stay in the mid-to-high 20s % through fiscal 2027-2029.
Executive Perspectives
Antonio Neri, HPE’s president and chief executive, framed the collaboration as part of a broader industry shift, stating that AI is driving the largest infrastructure build-out in history and that HPE, AMD, and Vultr are creating an open foundation to accelerate the next AI phase. Vultr chief executive J.J. Kardwell described the order as a response to “relentless demand” for high-performance AI infrastructure that outpaces existing capacity. Rami Rahim, executive vice president and president of networking at HPE, attributed the upgraded outlook to AI reshaping the technology stack and making networks more strategic for enterprises and service providers.
Market Impact
Analysts view the combined announcement as reinforcing HPE’s position as a primary beneficiary of the AI infrastructure expansion. The sizable Vultr order validates demand for rack-scale AI solutions and showcases the integration of HPE’s networking assets acquired through the 2025 Juniper acquisition. The revised growth forecasts suggest that HPE expects sustained, accelerated demand for networking hardware as AI workloads proliferate across cloud providers and enterprise data centers.