Hewlett Packard Enterprise Stock Soars on Strong Demand for AI Servers
Hewlett Packard Enterprise (HPE) stock is on the rise, nearing its 2018 record high, as investors rush to purchase shares driven by the company’s artificial-intelligence-focused servers powered by Nvidia chips. On Tuesday, HPE shares surged 4.5%, propelling the stock’s four-day run to more than 20%. This rally follows significant gains in the shares of Super Micro Computer and Dell Technologies, both of which have also witnessed a growing demand for AI servers.
Despite HPE’s January quarter financial results falling short of Street estimates, the computer company drew attention with its substantial momentum in AI-related servers. CEO Antonio Neri revealed that HPE has received $4 billion in AI-related server orders since the beginning of fiscal 2023, resulting in a backlog of $3 billion, an increase of $500 million in the latest quarter.
Neri highlighted the influx of new orders, but also noted that the company lacks the necessary supply to fulfill them. Jeff Kvaal, HPE’s investor relations head, mentioned during a conference call with a J.P. Morgan analyst that the company could have shipped more systems if it had more Nvidia chips. However, Kvaal clarified that HPE had received the expected number of chips and that the supply of graphics processing units (GPUs) remained on schedule over the last six to nine months.
When discussing the long-term outlook for HPE’s AI server business, Kvaal expressed satisfaction, stating “we’re pretty happy with what we can see.” He emphasized that the company’s order pipeline is significantly larger than the reported backlog, and it continues to expand consistently. Kvaal concluded by saying, “Our long-term view is very positive.”
Analyst comment
Positive news. HPE’s strong demand for AI servers, driven by Nvidia chips, has led to a surge in stock prices. Despite falling short of financial estimates, HPE has received $4 billion in AI-related server orders, resulting in a backlog of $3 billion. The company’s long-term outlook remains positive, with a significantly larger order pipeline and consistent expansion. The market is expected to respond positively, with an increase in demand for HPE’s AI server products.
