Hewlett Packard Enterprise Co. (HPE) surged to a record high after reporting better-than-expected quarterly revenue and a significant jump in sales of servers for artificial intelligence workloads. The company’s server unit sales rose 32% to $4.71 billion, driven by strong demand for high-powered computing to run AI workloads.
HPE’s revenue from AI systems increased 16% to $1.5 billion in the period ended October 31, exceeding analyst estimates. The company’s total revenue grew 15% to $8.46 billion, with profit per share coming in ahead of expectations.
However, HPE’s server revenue fell short of analysts’ average estimate of $4.76 billion, and the company’s adjusted gross margins declined to 30.9%, just below the average forecast of 31.1%. Analysts attributed this to the high cost of semiconductors used in AI servers.
HPE’s finance chief, Marie Myers, said on a call with analysts that the company is focusing on streamlining its cost structure and managing discretionary spend to improve margins. The proposed $14 billion acquisition of Juniper Networks Inc., which has caught regulatory attention, may also impact the company’s profitability.
Despite these challenges, HPE’s strong sales performance and upbeat guidance suggest a positive outlook for the company’s revenue momentum and margins in the future.
Source: https://finance.yahoo.com/news/hpe-reports-strong-sales-growth-210808814.html