Hewlett Packard Enterprise (HPE) soared nearly 20% on Tuesday after the server and networking products maker reported record second-quarter earnings, driven by a boom in corporate investment in AI infrastructure.
The company also brought forward its long-term financial targets by two years while raising its full-year outlook, predicting that server demand will remain strong through 2027.
“Traditional server orders increased by triple digits as customers continue to modernize their computing infrastructure and invest in AI inference,” CEO Antonio Neri said on an earnings call Monday afternoon.
“Orders more than doubled and significantly exceeded revenue, creating a backlog for record companies,” he added.
Unlike in Corona, where customers were double-booking, “There’s nothing like that. There are no cancellations,” Neri said.
Training artificial intelligence models requires expensive graphics processing units (GPUs), but the AI inference that performs the tasks can be performed on central processing unit (CPU) servers.
Management explained that enterprise customers prefer CPU servers because they can run AI locally and securely on-premises. This trend is increasing HPE’s sales and improving its profit margins.
Revenue for the quarter rose 40% to $10.7 billion. Adjusted earnings per share increased 108% to $0.79, beating company expectations.
HPE stock has risen nearly 25% in the past two sessions to a record high after peer Dell’s big earnings last week.
“Hewlett-Packard (HPE), a stock that has never appeared on our retail leaderboard before, ended today as the second most bought stock,” a Vanda Research note said after the bell on Monday.
“In fact, retail investors have purchased as much HPE in the past two sessions as they have in the past 11 months combined,” the note said.
HPE has soared more than 130% year-to-date.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X @ines_ferre.
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