Hewlett Packard Enterprise Surpasses Q2 Expectations with 15% Server Growth

Hewlett Packard Enterprise (HPE) has reported a robust second-quarter performance, exceeding market expectations and receiving positive feedback from analysts. The company achieved revenue of $73.6 billion and earnings per share (EPS) of $0.38, surpassing market forecasts of $74.5 billion and $0.33, respectively. The EPS growth was partly driven by reduced tariff impacts and organic business growth.

Evercore analysts maintained an "outperform" rating and a $22 price target for HPE. Led by Amit Daryanani, the analyst team highlighted HPE's "steady growth" and noted that the company's future quarters hold potential for sustained growth, regardless of pressure from activist investors. Several positive catalysts are on the horizon, including the June HPE Discover conference, where multiple new products will be unveiled, the antitrust lawsuit against Juniper Networks scheduled for early July, and the analyst day event on October 15.

Daryanani's team emphasized that HPE's guidance for the third quarter is more optimistic than market concerns, with projected revenue of $83.5 billion (above the market expectation of $82.2 billion) and EPS of $0.40-$0.45 (compared to the market consensus of $0.41). The company anticipates growth across all product lines, with the server business expected to see a 15% sequential increase due to large AI server orders. Additionally, HPE has narrowed its performance guidance for the fiscal year 2025.

Morgan Stanley analysts also maintained a "hold" rating and a $22 price target. Led by Meta Marshall, the analyst team attributed HPE's strong second-quarter performance to growth in AI server and storage businesses, as well as effective cost management measures. Despite some macroeconomic factors and delays in U.S. federal government business approvals, the completion of the Juniper Networks acquisition remains a significant catalyst for stock price appreciation.