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Following a powerful earnings report from Dell (NYSE: DELL) last week, rival Hewlett Packard Enterprise (NYSE: HPE) just released blowout numbers of its own, sending the computer stock up 24.3% through 10 a.m. ET.

Heading into last night's earnings report, analysts expected HPE to earn $0.53 per share on $9.8 billion in quarterly sales. Instead, HPE earned $0.79 per share on $10.7 billion in sales -- and raised guidance.

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CEO Antonio Neri boasted of an "exceptional" Q2, featuring "record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow." Boosted by surging demand for AI servers for artificial intelligence data centers, HPE's sales surged 40%, producing powerful profits along the way. Gross profit margins shot up more than eight full percentage points to 36.5%. Non-GAAP earnings beat expectations, while earnings calculated under generally accepted accounting principles (GAAP) nearly tripled to $1.26 per share.

Best of all, whereas a year ago, HPE burned $900 million in cash, this time the company generated $900 million in positive free cash flow.

And HPE expects the good times to keep on rolling. Turning to guidance, management forecasts fiscal Q3 2026 sales of $11.5 billion to $12.1 billion will produce GAAP profits of $0.84 to $0.89 per share.

For the full year, HPE says sales could range from $44.2 billion to $45.6 billion -- 29% to 33% growth -- with GAAP per-share profits from $2.42 to $2.52 and non-GAAP profits from $3.35 to $3.45. All these numbers exceed analyst forecasts, which have HPE generating sales below $41 billion, and pro forma profits closer to $2.43 per share.

At 44 times trailing earnings, HPE stock may not be cheap, but it sure is beating expectations!

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hewlett Packard Enterprise. The Motley Fool has a disclosure policy.

Why Hewlett Packard Enterprise Stock Just Popped was originally published by The Motley Fool