Hewlett Packard Enterprise shares surged 30% on Monday after the tech company posted blockbuster second-quarter results that beat estimates.
Here’s how the company fared compared to LSEG’s ratings:
- Earnings per share: 79 cents adj. compared to the 53 cents expected
- Net worth: $10.68 billion compared to $9.79 billion expected
It was the company’s biggest EPS beat since February 2018.
Revenue increased 40% over last year.
Overall Cloud & AI revenue came in at $7.71 billion, beating StreetAccount’s estimate of $6.87 billion, but it was the company’s server unit that really impressed. Server revenue, which is a subsidiary of the cloud and artificial intelligence unit, came in at $5.45 billion, beating the $4.66 billion expected by analysts.
The server maker exceeded its full-year EPS guidance by a full dollar, forecasting fiscal 2026 EPS of $3.35 to $3.45, up from $2.30 to $2.50. The company said it is now two years ahead of its long-term financial plan.
CEO Antonio Neri told CNBC’s Kristina Partsinevelos that reservations for traditional servers are in triple digits, and it’s the biggest backlog the company has ever seen.
“Customers continue to invest in modernizing their infrastructure and scaling AI, and our performance reflects the strength of our integrated network portfolio,” Neri said in a statement announcing the quarter’s results.
Neri also told CNBC that security-focused industries are seeing a rapid acceleration of AI on premises, instead of in the cloud. HPE specializes in providing that service to national labs and businesses.
Those are “higher margin opportunities” than the neoclouds favored by competitors Dell focus, according to chip analyst Patrick Moorhead of Moor Insights and Strategy.
“Their growth has a lot to do with the increasing profitability of AI, and the fact that they’re hitting their goals a year and a half early,” Moorhead said.
The global memory shortage remains dangerous, and Neri said he sees costs still rising in 2027.
Net income came in at $624 million, or 44 cents per share, compared with a net loss last year. HPE posted a net loss of $1.05 billion, a loss of 82 cents per share, last year.
The stock’s rise follows the company’s announcement of a new server rack on Monday at the Computex conference in Taiwan. The new server will be powered by NvidiaNew Vera central processing units, now in full production.
“This will be our new growth driver,” Nvidia CEO Jensen Huang said during a keynote at Computex on Monday. He said millions of new CPUs are being made right now, and will be available starting in the fall.
One day stock chart of HPE.
The New York Stock Exchange is one customer that plans to use the new Nvidia chips in HPE’s new server, helping it process more than three billion messages a day.
Neri said it’s a perfect fit for his company’s new ProLiant server because it’s designed for AI workloads.
“These workloads require high-performance servers with exceptional CPU performance to enable real-time computing across AI and financial services applications,” he said in a press release on Monday. “We’re bringing a new class of infrastructure to help customers accelerate data and operate with confidence in the most demanding environments.”
With the new HPE server, “businesses can put Vera to work, and NYSE shows how purpose-built AI infrastructure can do it in the world’s most demanding environments,” Nvidia’s Huang said in a release.
ProLiant’s new 12th generation server will be available in the fall.
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