Hewlett Packard Enterprise nyse Hpe Stock Surges on Earnings Beat Raises Full year Guidance

Hewlett Packard Enterprise (NYSE: HPE) Stock Surges on Earnings Beat, Raises Full-Year Guidance

Hewlett Packard Enterprise (NYSE: HPE) stock soared during intraday trading Wednesday after the company reported better-than-expected Q2 earnings. The server and storage manufacturer also raised its full-year guidance, citing increasing demand for AI servers.

In Q2, Hewlett Packard Enterprise reported adjusted earnings of 42 cents per share, outpacing analysts’ estimates. Revenue for the quarter reached $7.2 billion, marking a 3% increase from the same period last year and beating the consensus estimate of $6.8 billion. A substantial increase in server revenue and a remarkable surge in AI systems revenue primarily drove this growth.

Server revenue for the period grew 18% year-over-year to $3.9 billion. AI systems revenue more than doubled sequentially to over $900 million, driven by rising demand for AI servers. The hardware maker attributed part of its success to an improved supply of Nvidia’s (NVDA) H100 chips, integrated into HP Enterprise servers.

New AI Server Orders Drive Outlook

HPE reported cumulative AI systems orders totaling $4.6 billion since the start of fiscal 2023. CEO Antonio Neri highlighted in an interview with Barron’s that while the backlog of AI server orders remained consistent with the January quarter, the pipeline for new orders was “multiples” higher than the existing backlog.

For the current quarter, HPE forecasts net sales to range from $7.4 billion to $7.8 billion. The midpoint of this range surpasses analysts’ expectations of $7.4 billion. The company also expects adjusted earnings per share to range between 43 and 48 cents, compared to analysts’ estimates of 47 cents per share.

For fiscal 2024, HP Enterprise has revised its revenue growth forecast upward, now expecting growth between 1% and 3%, an improvement from its previous estimate of flat to 2% growth. The company also raised its adjusted earnings forecast to between $1.85 and $1.95 per share from the prior guidance of $1.82 to $1.92 per share.

Hewlett Packard Enterprise (NYSE: HPE) Stock Movement

On Wednesday, HPE stock surged 10.68%, closing at $19.48, marking a 7.15% increase for the week. The trading volume was 88,492,056 shares, significantly higher than the average daily volume of 16.32 million.