Hewlett Packard Enterprise (HPE) CEO Antonio Neri said there has been no slowdown in IT spending.
“Momentum is across all business lines,” Neri told Yahoo Finance while speaking at the company’s annual Discover Conference in Las Vegas. He noted that networking solutions, a part of HPE’s core offerings, are needed to deploy more AI and cloud applications.
“We see that growth in our orders, and now in our revenue,” he added.
Neri also pointed to continued growth in enterprise demand, particularly around AI and hybrid cloud services. He highlighted HPE’s deepening partnership with Nvidia (NVDA) to expand so-called AI factories — infrastructure needed to build, deploy, and scale AI models — as a key driver for growth.
But the view from CIOs may be more cautious. According to a new report from KeyBanc Capital Markets, IT budget expectations have slipped. The firm now forecasts IT budgets to grow just 2.7% in 2025, down from 3.9% at the start of the year. If that holds, it would mark the slowest IT budget growth period since 2020.
The firm noted broader restraint in the sector. Software vendors are seeing increased scrutiny, and IT hiring plans have scaled back. Major tech employers like Google’s parent company, Alphabet (GOOG, GOOGL), and Salesforce (CRM) have reduced headcounts following a post-pandemic hiring spree. In March, HPE announced a cost-cutting plan targeting $350 million in savings by 2027, primarily through workforce reductions.
Tariff-related uncertainty has also weighed on IT. While KeyBanc initially expected 33% of CIOs to say they are being impacted, 42% now report a negative effect. Still, only 19% said they’ve delayed spending, suggesting companies are cautious but not pulling back entirely.
HPE beat Wall Street’s expectations in its fiscal second quarter, with revenue of $7.6 billion, up 6% year over year, and adjusted earnings per share of $0.38, down 10% year over year. Its intelligent edge segment, which includes networking, had a 7% jump in revenue compared to the prior year, and the hybrid cloud segment grew 13%.
The company’s pressured server business was responsible for the bulk of its sales at $4.1 billion, a 6% increase over the prior year.
Meanwhile, HPE is facing a lawsuit from the Department of Justice over its proposed $14 billion Juniper Networks (JNPR) acquisition, with a trial set to begin on July 9. HPE first announced the deal in January 2024. The DOJ blocked the move due to concerns that it would reduce competition and stifle innovation.
