shares of hewlett packard enterprise The company soared 15% on Tuesday, posting its biggest gain since 2018 and its fastest pace on record.
CEO Antonio Neri told CNBC’s “Squawk on the Street” on Tuesday that the company is “uniquely positioned” to seize the disruption brought about by artificial intelligence.
“We have the best portfolio ever in this company,” he said.
AI-related demand in the server division blew away analysts’ expectations for second-quarter profit. HPE reported adjusted earnings per share of 79 cents versus the expected 53 cents, and overall revenue jumped to $10.68 billion versus the expected $9.79 billion.
Server revenue alone, a subdivision of the Cloud and AI division, came in at $5.45 billion, beating analysts’ expectations of $4.66 billion.
Neri called the division’s revenue growth “unusual” and told analysts on Monday’s earnings call that agent AI was “a key driver of demand acceleration.”
“Traditional server orders increased by triple digits as customers continue to modernize their computing infrastructure and invest in AI inference,” Neri said.
Dell’s own AI revenue explosion has some analysts cautious about how much sustainable demand there will be as companies continue to buy and server prices rise.
Bernstein raised his expectations for HPE after improved forecasts for the traditional server unit, raising his price target from $35 to $62, writing that “the stock already has a lot of upside potential.” The company maintained its rating at “Market Perform.” Morgan Stanley raised its price target to $71 from $33.
Morgan Stanley analysts said, “Like Dell, we expect HPE to see significant upside from inelastic server demand and share gains, as servers become strategic and servers in supply come at a higher price.” “Demand sustainability and peak revenue risk will be key discussions going forward.”
CNBC’s Katie Tarasov, Kristina Partinevelos and Chris Eudaily contributed to this report.
HPE stock price chart from the beginning of the year to the present.
