Hewlett Packard Enterprise (HPE, Financials) shares fell sharply on Friday after the company issued lower-than-expected earnings guidance and revenue forecasts, citing challenges from tariffs, pricing pressure, and high AI inventory levels. The stock declined $2.77, or 15.4%, to $15.19 as of 1:32 p.m. GMT-5 on Friday.

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Below analysts' forecast of $0.48, the business expected adjusted earnings per share of $0.28 to $0.34. Missing the $7.94 billion estimate, revenue is projected to be between $7.2 billion and $7.6 billion.

Set to take effect on March 4, HPE blamed part of its less optimistic view on tariffs on imports from Mexico, Canada, and China. Since December, the business has been making price modifications and supply chain tweaks meant to offset growing expenses.

Performance suffered as well from competitive challenges; aggressive pricing in conventional server sales and large AI inventory levels lower profitability. A fast transition to next-generation graphics processing units resulted in an overabundance of AI-related components, therefore influencing profitability even more.

To solve price and inventory issues, HPE responded by declaring cost-cutting initiatives including job layoffs. Although the business stated early indicators of recovery are showing, it anticipates margin constraints to last one to two quarters.

Notwithstanding a legal challenge from the US Department of Justice, HPE reiterated intentions to buy Juniper Networks for $14 billion by the end of fiscal 2025. Arguing the merger might lower competition in the corporate cellular sector, the DOJ has filed to stop the union.

HPE contested the assertions made by the DOJ, citing CEO Antonio Neri's observation that the purchase will improve market competitiveness. The corporation is still sure it will get regulatory permission; a trial scheduled for July 9. Within three years of conclusion, the agreement should provide $450 million in yearly synergies.

Although immediate challenges still exist, HPE said it is dedicated to controlling tariffs, modifying pricing, and streamlining its supply chain to boost financial performance.