Hewlett Packard Enterprise(HPE) is clearly benefiting from the ongoing artificial intelligence boom, as reflected in its third quarter financial results.
The company not only beat analysts’ expectations, but also significantly raised its annual forecasts, signalling that its strategic investments in AI servers and network infrastructure are starting to pay off.
The main driver of HPE’s performance was its server segment, whose revenue grew 16% year-on-year to $4.9bn. This jump is directly related to the growing demand for the computing power needed to train and deploy generative AI models.
HPE is successfully capitalising on this trend by offering AI-optimised systems with the latest Nvidia GPUs.
Even more impressive growth was seen in the networking division, where revenues shot up 54% to $1.7bn. This is a result of the recent $14bn acquisition of Juniper Networks, which was finalised in July.
The deal has significantly strengthened HPE’s position in the rapidly growing networking sector, which is growing faster than the traditional server hardware market.
For the third quarter ended 31 July, HPE’s total revenue was $9.14bn, compared to the market’s expectation of $8.53bn. The company also calmed down internally by reaching an agreement with influential activist investor Elliott Investment Management.
The settlement resulted in industry veteran Roberto Calderoni joining the board.
Strong results and stability have translated into strong optimism. HPE forecasts fourth quarter revenue of between $9.7bn and $10.1bn, above analyst consensus ($9.54bn).
More importantly, the company has raised its full-year revenue growth forecast for fiscal 2025 from the previous 7-9% to 14-16%. This is a clear signal that HPE intends to take full advantage of the favourable boom in the AI and networking markets.
