Hewlett Packard Enterprise (HPE) Raises Profit Forecast

(Reuters) – Hewlett Packard Enterprise (NYSE:HPE) raised its annual profit forecast on Wednesday due to increased demand for artificial intelligence servers. This demand has risen from higher investments in AI infrastructure by businesses.

However, shares of HPE fell nearly 3% in extended trading. Michael Ashley Schulman, chief investment officer at Running Point Capital, attributed the decline in stock price to a drop in quarterly revenue in the company’s data analysis and traditional cloud segments.

The company also left its full-year revenue forecast unchanged, which has impacted shares as expectations for AI-linked companies remain high.

Despite this, HPE’s AI server business continues to outperform. Computers powered by Nvidia (NASDAQ:NVDA) are designed to process and execute complex commands quickly and efficiently, attracting tech firms investing in generative AI and machine learning.

HPE reported third-quarter server revenue of $4.3 billion, a 35% increase from the previous year.

However, the company faces stiff competition from server makers like Dell Technologies (NYSE:DELL), which raised its annual profit and revenue forecasts last month due to server demand.

HPE raised its forecast for annual adjusted earnings per share to a range of $1.92 to $1.97, up from a previous range of $1.85 to $1.95.

For the fourth quarter, the company projected revenue between $8.1 billion and $8.4 billion, while analysts were expecting $8.18 billion.

The company expects fourth-quarter adjusted EPS to be between 52 cents and 57 cents per share, compared to estimates of 55 cents, according to LSEG data.

Revenue for the quarter that ended on July 31 was $7.71 billion, surpassing estimates of $7.67 billion. On an adjusted basis, the company earned 50 cents per share, exceeding estimates of 47 cents.