HPE last night became the latest in a string of vendor giants to report green shoots in its quarterly numbers.
The enterprise tech powerhouse, along with peers Dell and HP, is seeing an AI-fuelled rebound in sales following a torrid 12 months. But which of this trio’s green shoots are sprouting highest (we’ve also plotted Lenovo’s progress – its latest results came out two weeks ago)?
HPE
YoY sales rise: +3%
Results in a nutshell
Surging demand for AI systems helped HPE top revenue and profit expectations in its second quarter ended 30 April 2024.
Total revenues advanced 3% year on year to $7.2bn (a far cry from the 14% revenue drop it recorded in its Q1) as HPE more than doubled its AI systems revenue sequentially to $900m. Its networking business (‘Intelligent Edge’) saw revenues fall by 19% to $1.1bn, however, with hybrid cloud revenues also falling 8% to $1.3bn.
What the CEO said
“I am very optimistic about where we’re headed. AI demand continues to accelerate with cumulative AI systems orders reaching $4.6bn this quarter,” Antonio Neri
Investor reaction
HPE’s shares rose by over 15% last night as investors cooed over the scale of its revenue beat (the consensus among analysts was reportedly $6.8bn). In a further boon, HPE also raised its full-year outlook.
Read earnings call transcript here
Green shoots rating: 3/5
Dell Technologies
YoY sales rise: +6%
Results in a nutshell
Just like HPE, Dell returned to form in its latest quarter as revenues rose by an expectation-busting 6% year on year to $22.2bn in the three months to 3 May 2024 (having dropped 11% in its previous quarter).
Despite this, its shares bombed amid concerns over its AI server margins.
Revenues at Dell’s Infrastructure Solutions Group rose 22% to $9.2bn in its fiscal Q1 (as AI-optimised server shipments more than doubled sequentially to $1.7bn). Client Solutions Group revenues came in flat at $12bn, meanwhile.
What the COO said
[On why margins were down in its server business…] “We acquired several new large customers during the quarter. We’ll take that deal every time because we know over time, winning a new customer, we can sell the breadth of our portfolio over time. That’s exactly what we did. And we’ll continue to look for those opportunities to grow our customer base,” Jeff Clarke
Investor reaction
Dell’s share price had been on a decent run, more than doubling in the first five months of 2024.
Investors are a fickle bunch, however, with the margin concerns mentioned above enough to drive its shares down by over a fifth on Friday (despite the results beat).
Read earnings call transcript here
Green shoots rating: 4/5
HP Inc
YoY sales rise: -0.8%
Results in a nutshell
Although HP narrowly failed to record growth in its fiscal Q2 ending, its rate of year-on-year decline slowed for a fourth straight quarter, while its PC sales returned to growth for the first time in eight quarters.
CEO Enrique Lores dubbed this a “good indicator of overall market stabilisation”.
While printer net revenue tumbled 8% to $4.4bn, PC revenue was up 3% to $8.4bn in the three months to 30 April 2024 amid a recovery in commercial demand.
What the CEO said
“In the second half, we expect to see the introduction of AI PCs accelerate demand over and above the anticipated PC refresh cycle and Windows 11 rollout. We believe the AI opportunity in front of us will help drive higher ASPs and premium mix,” Enrique Lores.
Investor reaction
Very positive. HP Inc’s share price powered up 20% in the wake of its results announcement last Wednesday, putting it within touching distance of its all-time high in 2022.
Read earnings call transcript here
