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Hewlett Packard Enterprise surpasses revenue estimates with strong AI demand

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In Short:

Hewlett Packard Enterprise reported better-than-expected third-quarter revenue, driven by strong demand for its artificial intelligence servers. The company saw more than double in AI systems revenue from the prior quarter. Additionally, increased demand for hybrid cloud and data storage segments contributed to the positive results. HPE also raised its full-year adjusted earnings per share forecast, showing optimism for the future. Dell, a sector peer, also experienced growth in AI server shipments but with weaker margins.

Hewlett Packard Enterprise Forecasts Strong Third-Quarter Revenue

Hewlett Packard Enterprise announced that it expects third-quarter revenue to surpass Wall Street expectations, citing a surge in demand for its artificial intelligence servers. The company’s shares rose by 11% in extended trading following the positive forecast.

Figurines with computers and smartphones are seen in front of Hewlett Packard Enterprise logo in this illustration taken, February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

CEO Antonio Neri highlighted the substantial growth in AI systems revenue compared to the previous quarter, attributing it to a robust order book and improved conversion from their supply chain. The company also noted a rise in demand for their hybrid cloud and data storage segments, aided by the integration of AI.

Despite competition in the sector, with Dell experiencing a surge in AI server shipments but at the expense of weaker margins, HPE remains optimistic about its long-term prospects in hybrid cloud and networking.

Hewlett Packard Enterprise expects third-quarter revenue to fall between $7.4 billion and $7.8 billion, surpassing analyst estimates of $7.46 billion. In the second quarter, the company reported revenue of $7.20 billion, exceeding expectations of $6.82 billion. Additionally, the company raised its full-year adjusted earnings per share forecast to a range of $1.85 to $1.95.

On an adjusted basis, Hewlett Packard Enterprise reported earnings of 42 cents per share, beating analysts’ expectations of 39 cents per share.

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