Hewlett Packard Enterprise sees third-quarter revenue above estimates on robust AI demand

Illustration shows Hewlett Packard Enterprise logo

(Reuters) - Hewlett Packard Enterprise forecast third-quarter revenue above Wall Street expectations on Tuesday, helped by upbeat demand for its artificial intelligence servers, sending its shares up 11% in extended trading.

The results reflect strong demand for the company's AI-optimized servers, powered by Nvidia hardware, as more firms seek high performance compute to run artificial intelligence applications.

"AI systems revenue more than doubled from the prior quarter, driven by our strong order book and better conversion from our supply chain," said CEO Antonio Neri.

The company is also witnessing increased demand for their hybrid cloud and data storage segments, helped by the AI integration.

Sector peer Dell saw shipments for its AI servers more than double last month but at the cost of weaker margins.

"Long-term trends across hybrid cloud and networking also position us well for the future," said CFO Marie Myers, fanning optimism for a recovery in the networking end market, which has been grappling with weaker demand.

HPE forecast third-quarter revenue of $7.4 billion to $7.8 billion, compared with estimates of $7.46 billion, according to LSEG data.

For the second quarter, the company reported revenue of $7.20 billion, beating estimates of $6.82 billion.

The company also nudged up its forecast for full-year adjusted earnings per share to a range of $1.85 to $1.95, from its prior forecast of $1.82 to $1.92 per share.

On an adjusted basis, the company earned 42 cents per share, compared with estimates of 39 cents apiece.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Alan Barona)