Hewlett Packard Enterprise beats quarterly results estimates on strong AI server demand

(Reuters) - Hewlett Packard Enterprise beat Wall Street expectations for fourth-quarter revenue and profit on Thursday, as it benefits from strong demand for its servers used to power artificial intelligence applications.

 

Shares of the company rose around 1.5% in extended trading. 

 

Demand for HPE’s servers, equipped with Nvidia processors, has remained healthy as enterprises invest heavily in hardware that can support and process the swathes of data used in training AI models.

 

Despite a weaker performance, HPE has been seeing an improvement in its Intelligent Edge business, which provides networking hardware such as switches and Wi-Fi access points.

 

Intelligent Edge revenue fell 20% to $1.12 billion in the fourth quarter. 

 

HPE finalized a deal at the start of the year to acquire networking equipment maker Juniper Networks, in a move to boost its networking market share in a competitive industry. 

 

Total revenue for the fourth quarter came in at $8.46 billion, beating estimates of $8.26 billion, as per data compiled by LSEG. 

 

Server revenue rose 32% to $4.71 billion in the quarter ended Oct. 31.

 

For the first quarter, HPE expects revenue to grow in the mid-teens percent, roughly in line with analysts’ estimates. 

 

On an adjusted basis, the company earned 58 cents per share, beating estimates of 56 cents apiece. 

 

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Alan Barona)