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AI server business a lift to HPE sales
Fiscal second-quarter revenue increases 3.3% to $7.2 billion
By Brody Ford
Bloomberg
Hewlett Packard Enterprise Co. reported revenue that beat analysts’ estimates on a big jump in sales of servers built to handle artificial intelligence work. The shares rose in extended trading.
Fiscal second-quarter revenue increased 3.3% to $7.2 billion, the company said Tuesday in a statement. Wall Street projected a 2% decline year over year to $6.82 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 42 cents per share in the period ended April 30. Analysts, on average, estimated 39 cents.
The strong performance was due to the company’s server business, which generated sales of $3.87 billion. Analysts, on average, estimated $3.45 billion. Sales of AI-oriented systems doubled to more than $900 million compared with the first quarter, the company said. Increased demand and better availability of high-powered semiconductors from Nvidia Corp. led to the jump in AI systems sales, Chief Executive Officer Antonio Neri said in an interview.
The shares gained about 11% in extended trading after closing at $17.60 in New York. While server peers Dell Technologies Inc., and Super Micro Computer Inc. have seen share jumps this year of 77% and 171%, respectively, due to their AI-server businesses, HPE stock has increased just 3.7%.
“I think the market will start waking up about this,” Neri said of HPE’s AI server business. “I think after today’s announcement, they will understand even more.”
Sales will be $7.4 billion to $7.8 billion in the period ending in July, the company said. Analysts, on average, projected $7.45 billion. Profit, excluding some items, will be 43 cents to 48 cents a share, compared with an estimate of 46 cents.
For the fiscal year, HPE raised its revenue outlook to a gain of 1% to 3%, from a previous forecast of flat to 2%. The company said profit will be about $1.90 per share at the mid-point of its range, from a February forecast of about $1.87 per share at the mid-point.
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