HPE Stock Ticks Up: CEO Says Networking Segment ‘More Insulated’ From Memory Supply Squeeze

HPE’s networking segment sales rose 152% in the last quarter.

• Networking equipment are less exposed to disruptions in the memory market, HPE’s CEO said.
• Peers such as Cisco and Arista Networks also posted strong results recently, although weak margins pressured Cisco stock.
• Stocktwits sentiment for HPE shifted to ‘extremely bullish’ from ‘neutral.’

As surging memory prices pressure sectors from gadget makers to automobile companies, at least one corner of the tech market may be facing less strain: networking equipment. Shares of Hewlett Packard Enterprise (HPE), a leader in the space, ticked higher on Monday following quarterly results, lending credence to that thesis.

Companies that make routers, switches and cables have seen robust demand amid an intense buildout of data centers. However, these components contain little memory storage, making them less exposed to disruptions in the memory market, according to HPE.

“Networking is more insulated with memory comprising a significantly smaller portion of the bill of materials,” said Antonio Ner, CEO of HPE.

HPE’s Networking segment revenue grew 152% to $2.7 billion last quarter, per results published on Monday. Within the segment, the Data Center Networking division posted net sales of $444 million, a 382.6% growth from the prior-year period. 

Shares of HPE ended over 3% up on Monday and climbed higher in after-hours trading.

Core AI Server Segment Under Pressure 

To be sure, the segment forms only about 30% of the company’s topline. HPE draws over 50% of its sales from servers, high-performance computers and cloud, which are bundled as the ‘Cloud and AI’ reporting segment. 

“DRAM and NAND now make up over half of the bill of material cost of a traditional server, and this share will continue to rise as component costs increase,” Ner said, adding that he expects elevated prices to persist well into 2027.

“As a result, we expect higher average unit prices in both our server and storage products,” he said. HPE is working to mitigate the issue by expanding long-term agreements with suppliers, swiftly closing contracts while remaining flexible on pricing, and proactively communicating lead times with partners, Ner said.

CSCO, ANET In Focus

The favourable mix for networking equipment might favour other key producers, such as Cisco Systems and Arista Networks.

Cisco reported higher-than-expected revenue in the last quarter and raised its 2026 sales forecast; however, below-target gross margins raised concerns that component prices were weighing on profits. Arista Networks posted quarterly results and issued an annual forecast above analysts’ expectations, triggering a sharp rally in its stock last month.

Stock Moves

As of the last close, Cisco shares are down 1% year to date, while Arista Networks shares are up 4.7%. HPE shares are down 9.2%.

On Stocktwits, retail sentiment for HPE shifted to ‘extremely bullish,’ from ‘neutral’ following its results release, while message volume for the ticker surged by 1,400%. The sentiment for Cisco and Arista Networks was ‘bearish’ as of the last reading.

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