Why HPE Stock Jumped 12%: Oracle Capex, $30B Supplier Bill
Hewlett Packard Enterprise shares rose 12.4% on Friday, September 11, to $62.09, the company’s highest close since it began trading in 2015. Oracle had said the evening before that it still plans $90 billion to $95 billion of capital spending in its current fiscal year, which runs to the end of May 2027. Dell rose 12.0% to a record close. Oracle itself fell 1.7%.
HPE’s quarterly report, filed eight days before the rally, shows the cost side of that trade. As of July 31, HPE had $30.4 billion of purchase obligations it cannot cancel, mainly for inventory, up from $5.7 billion three months earlier. Dell reported $34.8 billion of such commitments on the same date, and Dell’s quarterly revenue is nearly four times HPE’s.
Friday’s rally rewarded the demand Oracle described. HPE’s filings show how much of the cost HPE had already locked in before that demand turns into revenue.
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The trigger was Oracle’s first-quarter earnings call on Thursday, September 10. Chief financial officer Hilary Maxson told analysts: “We continue to anticipate $90 billion to $95 billion in CapEx for the full year with not more than $70 billion in net cash CapEx.” Oracle spent $28.5 billion on capital projects in the quarter to August 31, according to its quarterly report, and free cash flow was negative $5.4 billion.
Oracle did not name HPE, Dell or any other supplier on the call, according to the transcript. Investors drew the connection themselves. HPE opened only 2.1% higher at $56.37 and climbed through the session, closing six cents below the day’s high on about 39 million shares, roughly double Thursday’s volume. HPE issued no news that day.
The rest of the data-center hardware group moved with it. NetApp rose 8.5%, Super Micro Computer 7.3% and Arista Networks 5.6%, while the SPDR S&P 500 ETF gained 0.9%. Oracle opened 7.5% higher at $164.43 and then reversed, closing at $150.28. TECHi’s report on how Oracle funded its $664 billion backlog explains the caution: in the same quarter, Oracle sold $19.9 billion of new stock and collected $11.4 billion of customer prepayments.
HPE has rallied hard on other companies’ results before. Two of its three biggest one-day gains this year came the session after another company reported: 12.6% on May 29, after Dell’s results, and Friday’s 12.4% after Oracle’s. The largest, 19.5% on June 2, followed HPE’s own report. The stock has gained 158.5% in 2026, from $24.02 at the end of last year.
The Oracle link is more direct for HPE than for most suppliers. On September 2, the day of its earnings, HPE announced that Oracle plans a multi-year deployment of HPE Juniper routing and switching equipment across its AI data centers. The release says the arrangement “includes networking support services and financing capabilities.” On the call, chief executive Antonio Neri described its size this way: “on a combined basis, this is a multi-gigawatt on a multiyear basis.”
HPE’s Form 10-Q adds a detail the press release only mentions in passing. On July 2, HPE issued Oracle a warrant to buy up to 4,156,466 HPE shares at one cent each. It vests in tranches “upon the achievement of specific milestones relating to purchases by the Holder and its affiliates of products and support,” and it can be exercised through June 25, 2029.
At Friday’s close, those shares were worth about $258 million, and Friday’s move alone added about $28.6 million. The more Oracle buys from HPE, the more of that stake it earns, and the more HPE’s stock rises, the more it is worth. HPE does not disclose how much revenue it expects from Oracle, so the size of the deal behind Friday’s rally is still unknown.
The number that stands out in HPE’s filing is not about Oracle. HPE defines unconditional purchase obligations as agreements that are “enforceable and legally binding,” with fixed or minimum quantities, and it excludes anything that can be cancelled without penalty. HPE’s own filings give the schedule at the end of each of the last two quarters:
Commitments running beyond fiscal 2027, which ends in October 2027, rose from about $1.3 billion to $14.6 billion. That pattern points to multi-year supply contracts rather than one large parts order.
Management described exactly that on the call. “We are collaborating very closely with our partners to secure additional multiyear supply agreements,” Neri said, adding that “some of them we signed already multiyear LTA agreements to lock our capacity,” referring to long-term agreements, which “obviously will have consequences on cost and pricing.” HPE also said it had “more than doubled our networking purchase commitments quarter-over-quarter” to meet orders for AI networking, which reached $2.2 billion cumulatively.
The filing also notes that amounts under contracts with variable pricing are estimated “based on prevailing market prices” at the reporting date. If component prices move, the $30.4 billion figure will change with them.
Dell is the obvious comparison, and both companies’ quarters ended on July 31. Dell’s 10-Q uses a similar definition: the non-cancellable portion of supplier agreements.
Dell’s AI server business is about ten times the size of HPE’s, yet HPE has committed nearly as much money to suppliers. One reading is that HPE is securing parts for a business it expects to have, rather than the one it has now. Chief financial officer Marie Myers said HPE’s AI systems backlog “increased 14% sequentially to a new high” and that orders of $2.4 billion “increased over 30% sequentially.” HPE also expects AI systems revenue to rise in the fourth quarter. The commitments are the bet that those orders turn into shipments.
TECHi examined the risks in Dell’s version of this model in May, when it described Dell’s AI server boom as a credit business. HPE is now running a similar balance-sheet test with a smaller revenue base.
The filing explains the timing plainly. HPE says it is “affected by the worldwide shortage in memory components” caused by AI data-center demand, and expects “such dynamics to continue in the medium term.” That shortage is also a large part of HPE’s recent growth.
Server revenue rose 35.3% to $6.8 billion in the July quarter, “predominantly due to an increase in the average selling price,” the 10-Q says, and that increase “was primarily driven by commodity price increases, especially memory and SSDs.” Much of HPE’s server growth came from higher prices rather than more units shipped.
The stockpile shows up on the balance sheet:
Over the nine months, building inventory used $5.8 billion of cash, and waiting longer to pay suppliers brought in $5.9 billion. In effect, HPE’s suppliers financed the stockpile. On the call, Myers said inventory reflected “higher commodity costs and targeted purchases to support increased orders and increased backlog.”
The 10-Q also lists what could go wrong. HPE has sold products under contracts “negotiated at prices prior to the recent escalation of component costs,” which it says have produced lower margins than expected and will continue to weigh on them. It also cites “longer customer acceptance timelines on AI-related orders,” which keep inventory on the books longer.
The quarter behind the rally was strong. In the earnings release, revenue rose 34% to a record $12.2 billion and adjusted earnings per share reached $1.11, above HPE’s own forecast range of $0.88 to $0.93. The Networking segment, which includes Juniper, grew revenue 74.9% to $2.9 billion with a 22.0% operating margin. Cloud & AI revenue rose 25.4% to $9.0 billion, and its operating margin jumped to 17.0% from 7.0% a year earlier.
HPE guided fourth-quarter revenue to $13.9 billion to $14.8 billion. It raised its fiscal 2027 framework to revenue growth of 13% to 17%, adjusted earnings per share growth of 16% to 20%, and free cash flow of at least $5.0 billion.
The margin outlook is more cautious. “Going forward, we expect our gross margin to moderate toward more historical levels driven by the growth in AI systems and the normalization in traditional servers, offset by the growing mix of networking,” Myers said. AI systems are HPE’s fastest-growing hardware, and they carry lower margins than networking. TECHi’s HPE earnings preview from May argued that Juniper was making networking the center of HPE’s AI story. With Networking earning a 22.0% operating margin against 17.0% for Cloud & AI, the latest quarter supports that view.
One more filing arrived after the rally. At 4:21 p.m. Eastern on Friday, a Form 144 notice was filed for the sale of up to 750,000 HPE shares held by Neri’s revocable trust, through J.P. Morgan. The form values the shares at $41.4 million, based on Thursday’s price; at Friday’s close they were worth about $46.6 million.
The sale falls under a Rule 10b5-1 trading plan adopted on June 4, 2026, more than three months before the rally. Such plans fix the terms of future sales in advance, so the filing does not show a decision made on Friday. For scale, an earlier Form 4 shows Neri sold 150,000 shares in April at about $26.50 each.
Networking Investor Day on September 30. HPE will host the event in Sunnyvale, California, with a webcast starting at 10:30 a.m. Central, led by networking chief Rami Rahim. The useful disclosure would be any figure for Oracle or other AI data-center networking customers, since HPE’s Oracle revenue is currently undisclosed.
Purchase obligations in the fourth-quarter report. Another large jump would mean HPE is still locking in supply ahead of shipments. A decline would mean components are arriving and being converted into revenue. Inventory days are the second number to check.
Who is buying the equipment. Maxson said “the vast majority” of Oracle’s new contracts in the quarter came “via prepay or bring your own hardware or a similar mechanic,” so they “will not require incremental capital from Oracle.” Some of the hardware behind Oracle’s backlog may therefore be paid for by Oracle’s customers rather than by Oracle. For suppliers, the equipment still has to be bought, but the customer paying the invoice may change.
Memory prices. They helped HPE’s revenue, and they underpin the variable-priced commitments. If memory prices fall, HPE’s revenue per server falls, while any fixed-price contracts it signed stay the same.
For HPE’s live price and filings, see the HPE quote page. Friday’s rally showed investors expect Oracle’s data-center spending to continue. HPE’s $30.4 billion of supplier commitments means it needs that spending to reach its own orders.
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