Key takeout
- HPE server sales increased 5.6% in the second quarter, with 10 consecutive quarter growth expected in the third quarter.
- AI Systems fueled $1.1 billion with HPE's Q2 backlog of $3.2 billion.
- The Proliant Gen 12 platform promotes performance, security and liquid cooling.
Hewlett Packard Enterprise's (HPE – Free Report) Server business rose 5.6% in the second quarter of fiscal year 2025. Third quarter revenue is expected to increase in server revenue for 2025 in the mid-2025 period.
HPE's AI server business is driven by businesses deploying computing heavy infrastructure and spreading AI factories, helping them acquire over $3.2 billion in net order value and $1.1 billion in backlog in the second quarter of 2025.
HPE's newly introduced Proliant Gen 12 server platform focusing on improved performance, increased security and direct liquid cooling technology is a major upgrade to its predecessor, allowing HPE to enhance its competitiveness in the server market.
HPE has experienced a slower sales slower than traditional servers, but the growth in sales of AI servers makes up for this weakness. Zacks Consensus estimates of HPE's 2025 revenues were $34.5 billion, indicating 14.2% year-on-year growth.
How competitors compete against HPE
Dell Technologies (Dell – (Free Report) exploits the strong demand for AI servers across the industry, driven primarily by the adoption of ongoing digital transformation and generated AI applications. Dell has experienced a continuous growth in server adoption in five consecutive quarters with AI servers and six quarters with traditional servers.
Super Microcomputer (SMCI – Free Report) is another server provider that is growing hugely behind the scenes of artificial intelligence (AI) workloads. As data centers grow capacity and new data centers are being created, the demand for high-performance, energy-efficient servers for super microcomputers is increasing.
Given the spread of AI and its large workload demand, the growth of server-supported data center businesses is likely to rise in the future, with all three giants, including HPE, Dell and Super Micro computers, all three giants.
HPE price performance, ratings and estimates
Hewlett Packard Enterprise stock is up 5.7% per year compared to Zacks Computer -Integrated Systems Industry's 25.4% growth.
Image Source: Zacks Investment Research
From an valuation perspective, HPE trades at a positive price ratio of 0.76, below the industry's 3.46.
Image Source: Zacks Investment Research
HPE's Zacks Consensus estimate of its 2025 revenues is fixed at $1.89 per share, meaning a 5% decrease from the previous year. The consensus mark for fiscal year 2026 remained at $2.39 per share, indicating a 26.5% increase from the previous year.HPE's revenue for fiscal year 2025 remains the same over the last 30 days, with revenue for fiscal year 2026 up 11 cents over the last 30 days.
Image Source: Zacks Investment Research
HPE stocks currently have Zacks rank #2 (purchase). You can see Here is the complete list of today's Zacks #1 rank (strong purchase) stocks.
