What You Need to Know Ahead of HP Enterprise Earnings

Key Points

• Hewlett Packard Enterprise will report earnings for its third fiscal quarter after the market closes on Wednesday.

• The server maker is expected to report higher revenue and profit than a year ago.

• Analysts have suggested the company is a “forgotten” beneficiary of the artificial intelligence boom, as the focus turns to Nvidia and other tech giants.

Hewlett Packard Enterprise (HPE) reports earnings for its third fiscal quarter after the company closes on Wednesday. Analysts expect the server and storage maker to post year-over-year revenue and profit growth as demand for its artificial intelligence (AI) products drives sales.

HP Enterprise is expected to report revenue growth of 9% from a year ago to $7.63 billion, while profit is expected to rise 18% to $547.3 million.

Analysts have suggested that HP Enterprise is benefiting from the AI ​​boom that the market may have “forgotten.” The company’s second-quarter earnings sent its stock up nearly 24% in the period just over a week after the report.

Key metric: AI systems revenues

Spending in the AI ​​industry has been a focus for some of tech’s biggest companies in recent quarters, with markets looking for signs that massive investments in the sector will pay off in revenue down the road. HP Enterprise said in the second quarter that its AI-related revenue more than doubled from the first quarter as it fulfilled a backlog of orders thanks to an improving supply chain.

JPMorgan analysts said they see positives in Wednesday’s earnings because of the “robust” nature of AI demand and better-than-expected supply for HP Enterprise. They said HP Enterprise is “also positioned to benefit, though perhaps more modestly than peers” Dell (DELL) and Super Micro Computer (SMCI).

Business in the spotlight: Analysts see upside potential and improved outlook

JPMorgan analysts said that the recovery in demand for other types of cloud storage and networking equipment also bodes well for HP Enterprise’s earnings. The analysts added that they see the potential for these factors to lead HP Enterprise to raise its full-year forecast.

Shares of HP Enterprise fell more than 1% to $19.16 on Tuesday afternoon, about 13% higher than at the start of the year but down from record levels that followed its June earnings report.

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