HPE posts huge earnings beat, sending its stock skywards in extended trading
Hewlett Packard Enterprise Co.’s artificial intelligence servers sold like hot cakes during its fiscal second quarter, powering the company to an impressive earnings and revenue beat. Wall Street was delighted with the results, and the company’s stock soared in extended trading.
For the quarter, HPE reported earnings before certain costs such as stock compensation of 79 cents per share, blowing away the Street’s consensus estimate of just 53 cents per share. Revenue for the period came to $10.68 billion, up 40% compared to the same period one year ago and comfortably ahead of the Street’s $9.79 billion target. The quarter was the company’s biggest earnings-per-share beat since February 2018.
AI is of course the main reason for HPE’s barnstorming results. The company said that its overall Cloud & AI revenue came to $7.71 billion, surpassing the Street’s target of $6.87 billion. However, it was the server business that really set the cat among the pigeons. Revenue from that sub-division of the Cloud & AI segment topped $5.45 billion, well ahead of the $4.66 billion analyst forecast. Moreover, although the profit margins on AI server sales are notoriously slim, HPE was able to bump up its overall net earnings to $624 million, up from a net loss of $1.05 billion one year ago.
