* HPE raises 2026 forecasts driven by strong demand

* Enterprise adoption of agentic AI boosts growth, CFO

says

* HPE says its Q2 revenue rises 40% to $10.68 billion

* Expects fiscal 2027 revenue growth of 8% to 12%

By Jaspreet Singh

June 1 (Reuters) - Hewlett Packard Enterprise ( HPE )

posted record second-quarter results on Monday, prompting the

company to accelerate its long-term financial goals by two

years, as expansion of AI data centers boosts demand for its

servers and networking products.

HPE, which competes with Dell and Super Micro

Computer ( SMCI ), is benefiting as customers increasingly buy

server and data center equipment to power AI applications such

as ChatGPT amid a memory chip crunch.

U.S. tech giants including Alphabet and Amazon ( AMZN )

plan to spend over $700 billion on AI infrastructure

this year, which would bolster demand for suppliers such as HPE.

That helped HPE to raise fiscal 2026 revenue growth outlook

to between 29% and 33%, up from its prior expectations of 17% to

22%. It now expects annual networking segment revenue growth of

72% to 75%, a sharp increase from 68% to 73%.

HPE reported record revenue growth of 40% to $10.68 billion,

beating LSEG-compiled analysts' average estimate of $9.79

billion. The adjusted earnings per share of 79 cents topped

expectations of 53 cents.

"The strength of the quarter was largely driven by the

performance of our traditional server business, which is really

focused on enterprise customers," CFO Marie Myers told Reuters.

She said the key difference this quarter was the anticipated

shift where enterprises significantly adopted agentic AI as a

core workload.

HPE said its revised fiscal 2026 ranges for adjusted EPS and

free cash flow are higher than what it projected the company

would achieve by fiscal 2028.

The company raised annual adjusted EPS in the range of $3.35

to $3.45, compared with an earlier projection of $2.30 to $2.50.

It had anticipated adjusted EPS of at least $3.00 for fiscal

2028.

"Customers continue to invest in modernizing their

infrastructure and scaling AI," CEO Antonio Neri said.

HPE also introduced a fiscal 2027 growth framework,

expecting revenue growth of 8% to 12%, adjusted EPS growth of

12% to 16% and free cash flow of at least $4.5 billion.