Hewlett Packard Enterprise (HPE, Financial) reported better-than-expected revenue and profits for the second quarter, driven by strong demand for its AI servers and hybrid cloud services. Following the announcement, HPE shares rose 5% in pre-market trading. The company disclosed a $1.36 billion impairment charge in the past quarter.
HPE benefited from increased spending on advanced data center architecture designed to support the complex processing needs of generative AI. This surge in generative AI has heightened the demand for HPE's AI-optimized servers, which are powered by NVIDIA (NVDA) processors.
For the quarter ending April 30, HPE reported revenues of $7.63 billion, surpassing analysts' estimates of $7.45 billion. The Chief Financial Officer, Tarek Robbiati, mentioned that the company addressed last quarter's execution challenges, enhancing server business profitability. Adjusted earnings per share were $0.38, exceeding the expected $0.32. Server revenue increased 5.7% to $4.06 billion, while hybrid cloud business revenue grew 13% to $1.45 billion.
HPE revised its annual revenue growth forecast to 7%-9% from the previous 7%-11%, citing ongoing macroeconomic and geopolitical complexities. The company forecasts third-quarter revenue between $8.2 billion and $8.5 billion, with expectations set at $8.17 billion.
