HP Enterprise Posts Higher-Than-Expected Revenue Driven by AI Demand

Hewlett Packard Enterprise (HPE) posted fiscal third-quarter sales that beat analysts' expectations, buoyed by a surge in server revenue driven by demand for artificial intelligence (AI).

The server and storage maker reported third-quarter revenue jumped 10% year-over-year to $7.7 billion, above analysts’ expectations. Server revenue was up 35% from the year-ago quarter to $4.3 billion. Revenue from HP Enterprise's Intelligent Edge and cloud segments fell year-over-year, while revenue in its financial services segment rose 1%.

Diluted earnings per share (EPS) of 38 cents missed analysts' estimates compiled by Visible Alpha, though adjusted EPS of 50 cents came ahead of projections.

“These results reflect our momentum in delivering on our edge-to-cloud strategy across networking, hybrid cloud, and AI," HP Enterprise CEO Antonio Neri said in a release.

The company raised its full-year EPS outlook to between $1.68 and $1.73, up from $1.61 to $1.71 previously, and maintained its revenue growth estimate of 1% to 3%.

HP Enterprise shares were down about 1.9% at $18.42 in extended trading Wednesday following the company's earnings release.