Shares of Hewlett Packard Enterprise (HPE) surged more than 15% in early U.S. trading after the company reported strong second-quarter earnings that surpassed expectations. The company posted earnings per share of $0.42, higher than the projected $0.39, while revenue came in at $7.2 billion, beating consensus estimates of $6.83 billion.
One of the key drivers of this performance was the remarkable growth in HPE AI server sales, which more than doubled to over $900 million in the quarter. Total server sales increased by 17.6% to $3.87 billion, reflecting strong demand for AI-related technologies.
Analysts at JPMorgan commented on the report, praising HPE for its unexpectedly good quarter and an exciting AI narrative that the management presented. They highlighted the significant achievement of $900 million in AI revenue, a milestone that was not anticipated, indicating a potentially conservative outlook by the company.
In a separate move, analysts at Stifel raised their price target for HPE shares from $18 to $22, indicating a positive outlook for the company’s stock performance in the future.
Looking ahead, HPE provided guidance for annual earnings per share in the range of $1.85 to $1.95, compared to Wall Street’s projection of $1.88. For the fiscal third quarter, the company expects earnings per share ranging from $0.43 to $0.48 and revenue between $7.4 billion and $7.8 billion.
Overall, the strong financial performance of HPE in the second quarter, driven by robust AI server sales, has impressed analysts and investors alike. The company’s strategic focus on emerging technologies such as AI seems to be paying off, as reflected in the significantly higher revenue generated in this segment. With a positive outlook for future earnings and growth prospects, HPE appears to be on a promising trajectory that has resonated well with the market.
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