Hewlett Packard surges over 12% as AI-server demand powers strong results
Hewlett Packard Enterprise rose more than 12% on Wednesday after the company forecast third-quarter revenue above Wall Street estimates, helped by growing demand for its AI-optimized servers.
Server makers are benefiting from robust demand for AI systems provided by companies including HPE, which support power-hungry data centers amid growing investments in generative AI technology.
The company's lead times — the duration between starting and completing a process — to deliver Nvidia's AI-powered chips is now between six weeks and 12 weeks, CEO Antonio Neri said in a post-earnings call.
Analysts at Bernstein said this suggests potential for HPE and peer Dell Technologies to have «very strong shipments over the next quarter or two as they deliver on backlog», but it depends upon customers being willing to take deliveries earlier.
The Texas-based company is set to add more than $2 billion to its market value based on its current price of $19.84, after it impressed investors with upbeat quarterly results.
At least eight analysts have raised their price targets on the stock to between $19 and $23 after the results. Hewlett Packard trades at 8.9 times its 12-month forward earnings estimates, compared with 16.5 for Dell and 23.1 for Super Micro Computer.
The company forecast third-quarter revenue of $7.4 billion to $7.8 billion, compared with analysts' estimate of $7.46 billion, according to LSEG data.
Its server revenue rose 18% from a year earlier, to $3.9 billion in the second quarter ended April 30. Its
