HPE stock weakness is driven by margin concerns (40.1% gross margin, expected to decline) despite strong top-line growth.

Yes, it outperformed in revenue. Revenue growth rate reached $12.2 billion. That was higher than expectations, which were around $12 billion. It's only a slight advantage. The adjusted earnings per share amounted to $1.11.

That was also higher than expected. If you look at some of the internal details of this matter. The networking aspect of their business achieved a 75% year-on-year growth, to approximately $2.9 billion .

Cloud and artificial intelligence revenues reached $9 billion . That was an increase of more than 25% year-on-year. Server revenues specifically grew by more than 35% to reach approximately $6.8 billion.

Total adjusted orders jumped 42% year-on-year, continuing to outpace revenue growth.

Now, I think the key point here with HPE, and the reason we are seeing some weakness, is that gross profit margins have come in at around 40.1%. These margins are expected to decline slightly, and guidance may be slightly higher than expected, but perhaps the market wanted more from this networking company.