hewlett packard enterprise Shares soared 30% on Monday after the company reported blockbuster second-quarter results that far exceeded expectations.
Here’s how the company performed compared to LSEG’s estimates:
Earnings per share: Adjusted 79 cents expected 53 cents Earnings: $10.68 billion vs. $9.79 billion expected
This was the company’s largest EPS growth since February 2018.
Revenue was up 40% compared to a year ago.
Overall cloud and AI revenue came in at $7.71 billion, beating StreetAccount estimates of $6.87 billion, but it was the company’s server unit that really impressed. Revenue from the server division, a subdivision of the cloud and artificial intelligence division, came in at $5.45 billion, blowing away analysts’ expectations of $4.66 billion.
The server maker raised its full-year EPS outlook by $1, and expects fiscal 2026 EPS to range from $2.30 to $2.50 to $3.35 to $3.45. The company said it is currently tracking its long-term financial plan two years ahead.
CEO Antonio Neri told CNBC’s Cristina Persineveros that traditional server reservations are up by triple digits, making it the largest backlog the company has ever seen.
“As customers continue to invest in modernizing their infrastructure and expanding AI, our results demonstrate the strength of the cohesiveness of our network portfolio,” Neri said in a release announcing the quarterly results.
Neri also told CNBC that AI is accelerating especially quickly in industries focused on security, on-premises rather than in the cloud. HPE primarily focuses on providing its services to national laboratories and businesses.
These are “higher margin opportunities” than the neoclouds favored by competitors Dell Patrick Moorhead, a chip analyst at Moor Insights and Strategy, said these are the focus.
“Their growth has everything to do with the increasing profitability of AI and the fact that they met their goals a year and a half ago,” Moorhead said.
Global memory shortages remain a risk, with Neri predicting costs will remain elevated until 2027.
Net income was $624 million, or 44 cents per share, compared to a net loss in the same period last year. A year ago, HPE posted a net loss of $1.05 billion, or a loss of 82 cents per share.
The jump in stock prices came after the company unveiled new server racks at the Computex conference in Taiwan on Monday. The new server will have: Nvidia‘s new Vera central processing unit is now operating at full capacity.
“This will be our new major growth driver,” Nvidia CEO Jensen Huang said in Monday’s Computex keynote. He said millions of new CPUs are currently being manufactured and will be available starting in the fall.
HPE’s daily stock price chart.
The New York Stock Exchange is one of the customers planning to use new Nvidia chips on HPE’s new servers to handle more than 1 trillion messages per day.
Neri said this is a task well suited for his company’s latest ProLiant servers, as they are optimized for agent AI workloads.
“These workloads require high-performance servers with exceptional CPU performance to enable real-time inference across agent AI and financial services applications,” he said in a press release Monday. “We are delivering a new class of infrastructure that helps our customers accelerate insights and operate with confidence even in the most demanding environments.”
The new HPE servers will allow “enterprises to run Vera and NYSE will demonstrate what purpose-built AI infrastructure can do in the world’s most demanding environments,” Nvidia’s Huang said in the release.
New 12th generation ProLiant servers are scheduled to be available in the fall.
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