What Happened?

Shares of enterprise technology company Hewlett Packard Enterprise (NYSE:HPE) fell 20.1% in the pre-market session after the company reported weak fourth-quarter (fiscal Q1 2025) results: its full-year EPS guidance missed significantly, and its revenue guidance for the next quarter fell short of Wall Street's estimates. 

On the bright side, sales were up 16% year on year, thanks to strong momentum in servers and hybrid cloud. Server revenue surged 29%, while hybrid cloud sales climbed 10%. Those gains helped cushion some softness in the Intelligent Edge business. 

Despite the revenue beat recorded during the quarter, operating margins declined meaningfully, and free cash flow also came in negative. The company now expects non-GAAP operating profit to be anywhere from flat to down 10% for the year, which signals some real margin pressure. Overall, this was a softer quarter, with strong revenue growth offset by margin contraction and weak guidance.

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What The Market Is Telling Us

Hewlett Packard Enterprise’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. But moves this big are rare even for Hewlett Packard Enterprise and indicate this news significantly impacted the market’s perception of the business.

Hewlett Packard Enterprise is down 29.9% since the beginning of the year, and at $15.06 per share, it is trading 38.3% below its 52-week high of $24.42 from January 2025. Investors who bought $1,000 worth of Hewlett Packard Enterprise’s shares 5 years ago would now be looking at an investment worth $1,351.

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