Hewlett Packard Enterprise Exceeds Sales Expectations with AI Server Business, Drives Stock Price Up

In the second quarter, Hewlett Packard Enterprise Co. exceeded analysts’ expectations with a significant increase in sales of servers built for artificial intelligence work. This led to a rise in the company’s shares during extended trading. The fiscal second-quarter revenue grew by 3.3% to $7.2 billion, surpassing Wall Street’s projection of a 2% decline to $6.82 billion. The company’s profit, excluding certain items, was 42 cents per share, exceeding analysts’ estimate of 39 cents.

The strong performance was attributed to the server business, which generated sales of $3.87 billion, surpassing analysts’ average estimate of $3.45 billion. Sales of AI-oriented systems more than doubled to over $900 million compared to the first quarter, driven by increased demand and improved availability of high-powered semiconductors from Nvidia Corp, according to CEO Antonio Neri.

HPE’s shares rose by about 11% in extended trading after closing at $17.60 in New York despite the success of server peers like Dell Technologies Inc., Super Micro Computer Inc., who have seen significant share increases this year but HPE stock has only had a 3.7% increase in value

Neri expressed confidence that the market will recognize and appreciate HPE’s AI server business following the latest results as well as its outlook for the future period ending in July where they anticipate sales to be between $7.4 billion and $7.8 billion with a projected profit of between 43 cents and 48 cents per share compared to analysts’ average forecast of $7.45 billion with an estimated profit of around 46 cents per share

For the fiscal year, HPE raised its revenue outlook to a gain of 1% to 3%, up from its previous forecast of flat to 2%, with a projected profit of about $1