NEW YORK — Hewlett Packard Enterprise Co. shares surged more than 24% on Tuesday, reaching $58.50 in morning trading after the company delivered record fiscal second-quarter results and sharply raised its full-year outlook, citing explosive demand for AI servers and networking equipment.

The jump follows HPE's announcement late Monday that revenue climbed 40% to $10.7 billion in the quarter ended April 30, beating expectations and underscoring the company's emergence as a major beneficiary of the artificial intelligence infrastructure boom.

With the stock now trading well above pre-earnings levels, investors are weighing whether the rally leaves room for further gains or if HPE represents a compelling buying opportunity at current valuations.

Strong Results Driven by AI Momentum

HPE reported non-GAAP earnings per share of $0.79, up 108% from the prior year and ahead of forecasts. The Cloud & AI segment, which includes servers and storage, generated $7.7 billion in revenue, up nearly 23%. Server revenue alone rose 33% to $5.5 billion.

Networking revenue surged 148% to $2.7 billion, boosted by integration of the Juniper Networks acquisition and strong demand for AI-optimized infrastructure. The company posted record free cash flow for a second quarter at $915 million.

CEO Antonio Neri described the quarter as record-breaking. "Customers continue to invest in modernizing their infrastructure and scaling AI, and our performance shows the strength of our combined........

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