HPE skyrockets 30% on biggest earnings beat since 2018

Hewlett Packard Enterprise shares skyrocketed 30% on Monday after the tech company posted blockbuster second-quarter results that blew away estimates.

Overall Cloud & AI revenue came in at $7.71 billion, topping the StreetAccount estimate of $6.87 billion, but it was the company's server unit that really impressed. Server revenue, which is a sub-division of the cloud and artificial intelligence unit, came in at $5.45 billion, blowing away the $4.66 billion expected by analysts.

The server maker bumped its full-year EPS guidance by a full dollar, projecting fiscal year 2026 EPS of $3.35 to $3.45, up from $2.30 to $2.50. The company said it is now tracking two years ahead of its own long-term financial plan.

CEO Antonio Neri told CNBC's Kristina Partsinevelos that traditional server bookings are up triple digits, and it is the biggest backlog the company has ever seen.

"Customers continue to invest in modernizing their infrastructure and scaling AI, and our performance shows the strength of our combined networking portfolio," Neri said in a release announcing the quarterly results.

Neri also told CNBC that industries focused on security are seeing especially rapid acceleration for AI on-premises, instead of in the cloud. HPE is largely focused on providing that service to national labs and enterprises.

Those are "higher margin opportunities" than the neoclouds that competitors like Dell are focused on, according to chip analyst Patrick Moorhead of Moor Insights and Strategy.

"Their bump up has everything to do with increasing profitability for AI, and the fact that they're hitting their targets a year and a half in advance," Moorhead said.