HPE(US:HPE) Zhi Tong Cai Jing·2025-09-01 08:44Core Viewpoint - HPE is expected to report a decline in earnings per share for Q3, while revenue is projected to grow, reflecting mixed performance in the AI server market [1][2] Financial Performance - Analysts predict HPE's Q3 earnings per share will be $0.43, a 14% decrease year-over-year, with revenue expected to reach $8.78 billion, a 13.9% increase from the previous year [1] - Dell's AI server orders fell to $5.6 billion in Q2 from $12.1 billion in Q1, indicating a slowdown in demand [1] - HPE has $3.2 billion in unfulfilled revenue in the AI systems sector, with strong growth anticipated in Q3 due to the deployment of Blackwell NVL72 [5] Market Dynamics - The demand for AI tools has driven sales for high-performance server manufacturers like HPE, Dell, and Supermicro, but concerns remain about profitability due to reliance on expensive processors from Nvidia and AMD [1] - Supermicro unexpectedly lowered its sales forecast for FY2026 to at least $33 billion, down from an earlier optimistic outlook of $40 billion, leading to significant stock sell-offs [2] Strategic Moves - HPE's acquisition of Juniper Networks is expected to enhance its performance, with analysts projecting a significant increase in earnings per share for FY2026 [2][3] - Morgan Stanley upgraded HPE's rating to "overweight" following the Juniper acquisition, anticipating growth in AI and networking sectors [2][3] Industry Outlook - Analysts express optimism about the tech hardware sector, with Morgan Stanley raising target prices for companies like Dell and NetApp, indicating a positive outlook for enterprise tech spending, particularly in AI and networking [3] - Nvidia's earnings have provided a positive signal for companies like Dell and HPE, suggesting sustained demand growth in AI computing capabilities [4] Operational Challenges - HPE's server business faced a decline in operating profit margin, which fell to 5.9% in Q2, down 510 basis points year-over-year [6] - The company aims to improve server business margins to mid-high single digits in Q3, but recovery to around 10% may not occur until Q4 FY2025 [6]