HPE - Evaluating Hewlett Packard Enterprise's Position In The AI Market
2024-06-29 04:14:13 ET
Summary
- The company may be a big beneficiary of the proliferation of Artificial Intelligence.
- Recent earnings report showed strong AI servers revenue growth, but potential risks include lower profitability in AI servers and competitive pricing.
- Valuation suggests HPE may be at fair value or slightly overvalued.
Hewlett Packard Enterprise (NYSE: HPE ) split from HP Inc. ( HPQ ) in 2015, with HP focusing on personal computers and printers and Hewlett Packard Enterprise focusing on business-focused servers, storage, networking, the cloud, software, and various services. HPE benefits from many of the same trends in enterprise computing that had pushed Dell Technologies' ( DELL ) stock up over 100% earlier this year. In my Dell article , I discussed how investors saw clearer evidence in its last earnings report released on May 30, 2024, that demand for artificial intelligence ("AI") enterprise servers could be a huge growth driver for the company moving forward.
The market recently became more excited by HPE's prospects after it released its second quarter fiscal year ("FY") 2024 earnings report on June 4, showing AI systems revenue more than doubled from the first quarter's results. Investors in HPE hope that now that the company's AI initiatives are picking up, its stock performance can achieve a similar performance as Dell's. The stock rose around 11% the day after the company released the report....
Evaluating Hewlett Packard Enterprise's Position In The AI Market