Investing.com - Shares in Hewlett Packard Enterprise Co (NYSE:HPE) soared more than 15% in premarket trading Wednesday after the company reported better-than-expected earnings results.
The company reported Q2 earnings per share of $0.42, which is $0.03 higher than the projected $0.39. The company's revenue for the quarter reached $7.2 billion, surpassing the consensus estimate of $6.83 billion.
The strong revenue performance was driven by strength in HPE's AI server sales, which more than doubled quarter-over-quarter to over $900 million amid improved GPU supply. Overall server sales increased by 17.6% to $3.87 billion.
Commenting on the report, JPMorgan analysts said HPE delivered "an unexpectedly good quarter" with management "posting a nice beat and telling an exciting AI story."
"HPE didn't come up in industry conversations, and even a month ago it would be hard to imagine they would do $900m in AI revenue, and it feels like bulls think the company is guiding conservatively," they added.
Also, Stifel analysts raised their HPE estimates and the price target from $18 to $22 on the back of a strong print.
Looking ahead, HPE has issued an optimistic guidance for FY2024, forecasting an EPS of $1.85-$1.95, which is in line with the consensus estimate of $1.88. For Q3 2024, HPE anticipates an EPS of $0.43-$0.48, compared to the consensus of $0.47, and expects revenue to be between $7.4 billion and $7.8 billion, in line with the consensus estimate of $7.46 billion.