A little over a year after closing the Juniper Networks acquisition, Hewlett Packard Enterprise Co. today used its Networking Investor Day to argue that networking is no longer a supporting act at HPE. It’s the growth engine.
The numbers shown to investors support that. HPE says its combined networking business will grow from $9.3 billion in fiscal 2024 to about $11.3 billion in fiscal 2026, with operating profit rising from $1.6 billion to $2.5 billion over the same period.
The company now expects networking revenue to grow in the high-teens to low-20% range in fiscal 2027, up from the 14% to 17% it guided on its last earnings call. It has set a long-term target of high-teens compound annual growth through fiscal 2029, with operating margins in the mid- to high 20s, according to HPE’s investor day announcement.
“AI is reshaping the technology stack, making the network more strategic,” said Rami Rahim (pictured), executive vice president and general manager of HPE Networking and former Juniper chief executive. Any networking vendor could say the same this year. What differentiates HPE is its product breadth and sales reach, which enable it to act on that, assuming execution holds.
Here are my five takeaways that should matter to investors and information technology leaders.
The integration is ahead of plan
Mergers of this size usually stall over cultural and sales conflicts. HPE has moved faster than most. Rahim said the company merged the sales organizations about six months after closing, under “one catalog, one compensation plan,” and every seller now carries the full portfolio. Cost synergies tell the same story. The original deal target was $450 million, which rose to at least $600 million at close and is now $800 million in annual run-rate savings by the end of fiscal 2028.
What investors should watch next is channel activation. Only about 10% of Aruba and Juniper partners overlap, and on Nov. 1, all 60,000 HPE partners will move to a single program. The cross-sell upside is huge and should move the needle on revenue and margins, but partner transitions are where integrations often slip.
Scale-up networking opens a new market
Data center networking is HPE’s fastest-growing segment, with a target of low to high 50% CAGR through fiscal 2029, compared with a market HPE pegs at 44%. Rahim explained that companies can spend billions on GPUs, but if the network can’t meet performance demands, “those resources are not fully utilized.”
The most important new development is scale-up, which Praveen Jain, senior vice president and general manager of data center, described to investors as connecting graphics processing units within a rack rather than scaling out across racks. Juniper has historically competed in scale-out and scale-across. The AMD Helios rack brings HPE into scale-up. Rahim said Helios represents more than a $1 billion networking opportunity over the next two years, with orders for the networking trays already exceeding $200 million.
At the event, HPE announced a $1.2 billion order from Vultr, its first for Helios. Each rack uses six HPE Juniper Networking QFX5252 scale-up Ethernet switch trays to connect 72 AMD Instinct MI455X GPUs. With HPE’s role in Oracle’s gigawatt-scale AI buildout, the data center story appears credible.
There are caveats. Full-rack deals tie up working capital, and Rahim said fiscal 2027 will be more back-end-loaded than usual as new systems ramp. On neoclouds, though, he was bullish on the opportunity: “Many neoclouds value the simplicity of buying a complete system from a single technology provider.” Juniper alone couldn’t have won the Vultr deal. HPE could.
Jumping into neocloud may make risk-averse investors nervous, as many deals in this space have used creative financing models such as credit swaps and asset-backed purchases. I asked Rahim about this during the analyst Q&A, and he was emphatic that the company has and would walk away from deals if the risk level is too high.
Routing matters again
Routing was long considered a mature, low-growth business. AI has changed that. HPE is targeting low to high 20% growth in routing through fiscal 2029, and AE Natarajan, SVP and GM of routing infrastructure solutions, explained why. With AI, upstream and downstream traffic become similar; the traffic can’t be cached like video, and AI agents generate it constantly. “Digital users don’t fall asleep,” he said.
That plays to Juniper’s MX and PTX platforms and its Trio and Express silicon, but the field is more crowded than it was five years ago. Rahim didn’t dismiss the competition. “We were up against 800-pound gorillas in practically every market opportunity that we wanted to pursue,” he said. He also said growth is “very much unit-based,” not driven by price increases, which is the better kind of growth. Owning its own silicon is the edge here, and HPE will need to keep investing in it.
Self-driving networks lead in campus, security trails but due for a boost
Campus and branch account for roughly half of HPE Networking’s revenue, and HPE expects high-single-digit growth there, compared with about 6% for the market, as customers upgrade to Wi-Fi 7. The differentiator is the self-driving network built on Marvis, Juniper Mist’s AI engine. “Self-driving starts with a very simple philosophy — up is not the same as good,” said Sujai Hajela, executive vice president and general manager of campus and branch.
The strongest endorsement came from a customer. Sajeev Nair, senior director of digital core services at ServiceNow Inc., described his network before consolidation: Each new point product meant “creating another fragmentation in your telemetry that is already fragmented” and “signing up for another control plane that you have to manage.” He said a manual workload that once took 2,000 to 3,000 hours a year now takes fewer than 60 hours.
Rahim said that given competitors’ self-driving claims, “you really have to look under the covers to see how much is actually there.” He was equally clear that Mist and Aruba Central will “never converge into one platform,” even though they now share Marvis, access points and CX switching.
Security is becoming an increasingly important part of HPE’s business, but it will remain a network feature rather than a move into standalone infrastructure. HPE forecasts high-single-digit growth in security and pegs the market at 12%, making it the only category where HPE doesn’t plan to outgrow the market. David Hughes, senior vice president and general manager of SASE and security, made a strong case for using “the network as a sensor” and for extending zero trust to AI agents.
Building security into the network helps customers stay secure. It isn’t a plan to take share from security-first vendors. In fact, I expect many security vendors to remain strong ecosystem partners for HPE.
Supply, not demand, limits growth
One of the day’s most interesting comments came during the Q&A. “Quite frankly, we, including me, underestimated how explosive market growth is,” Rahim said. Third-quarter orders grew 3.5 times faster than revenue, and HPE doubled its networking supply commitments from the prior quarter. His outlook for fiscal 2027 was candid: “Still supply-limited, just less supply-limited.”
That’s a good problem to have, but it’s still a problem. Fiscal 2027 guidance depends on how quickly HPE secures components, not just on the number of deals it wins.
What this means for buyers
For IT leaders, I’d recommend the following regardless of whether you are an HPE customer:
- Lock in supply early. Rahim expects fiscal 2027 to remain supply-limited, and HPE isn’t the only vendor in that position. AI networking supply is tight across the industry. If you have AI data center buildouts or Wi-Fi 7 refreshes planned for 2027, secure delivery dates and allocation commitments in writing now, not when the purchase order goes out. Build some slack into project timelines, and ask your vendor which parts of the order are most at risk.
- Test self-driving claims in production. Rahim is asking customers to “give us a shot,” and he warned that buyers need to “look under the covers” of competitors’ automation claims. Take him up on both. Run a proof-of-concept on a real part of your network, not in a lab, and set success metrics before it starts: fewer trouble tickets, faster mean time to repair, and less time spent on manual work. The ServiceNow numbers are a good benchmark. Hold every vendor, including HPE, to the same test.
- Don’t wait for a single platform. HPE has said Mist and Aruba Central won’t merge. Instead, the two will share Marvis, access points, and switching. That clarity is helpful. Choose based on your deployment: Mist for cloud-only operations, Aruba Central if you need on-premises options. Don’t delay a refresh waiting for a single platform, because one isn’t coming. Ask HPE for a roadmap that shows which features will reach both platforms and when.
- Push for open scale-up. Until now, scale-up networking within the AI rack has largely been a proprietary, single-vendor decision. Helios, with Ethernet scale-up and UALink over Ethernet, offers neocloud and enterprise AI buyers a credible alternative. Even if you don’t buy Advanced Micro Devices, use it as leverage. Press every AI infrastructure vendor on open standards, interoperability and silicon choice so a rack-level decision today doesn’t lock in your architecture for the next decade.
- Retire legacy gear before AI exposes its flaws. Anthropic’s Claude Mythos has changed the math for upgrade cycles. Through Project Glasswing, the model has helped vetted organizations identify more than 10,000 high- or critical-severity vulnerabilities. Switches, routers, access points and firewalls that are end-of-life or running outdated software used to be a problem you could put off. During the industry analyst Q&A, Rahim stated that many of the customers they inventory have equipment that belongs in a museum. This is more common than most realize, especially in operational-technology-heavy environments where change causes disruption. Those switches that create stability are now easy targets because AI can find and exploit flaws faster than any vendor can patch them, and end-of-life gear won’t be patched at all. Inventory everything that’s out of support, replace it as part of the Wi-Fi 7 cycle rather than after it, and use network-level segmentation, as David Hughes described, to contain devices you can’t replace yet.
Final thoughts
When HPE announced the Juniper deal, skeptics asked a fair question: Could a server company run a networking business without slowing it down? Investor Day largely answered that question. The sales teams have merged, and the product roadmap has accelerated rather than stalled. More importantly, HPE is now winning deals, such as the Vultr Helios order, that neither company could have won alone.
Rahim closed by saying the network has “never been more critical to how businesses operate” and to how AI gets built. For the first time in HPE’s history, networking is the business that makes the case for the rest of the company, not the other way around.
The hard part is shifting from strategy to execution. Over the next 12 months, HPE must ramp Helios with more than one anchor customer, move 60,000 partners onto a new program without disrupting the channel, secure enough components to convert a large backlog into revenue, and demonstrate that security can do more than protect existing accounts. None of these is a strategy problem, and that’s the point. HPE has the portfolio, sales reach and demand. If it executes, the targets it set this week will look conservative. If it doesn’t, supply constraints and channel friction will be the reasons.
Either way, the network is no longer a side story at HPE. It’s the main one.
Zeus Kerravala is a principal analyst at ZK Research, a division of Kerravala Consulting. He wrote this article for SiliconANGLE.