Core Insights - Hewlett Packard Enterprise (HPE) is set to report its fourth-quarter fiscal 2025 results on December 4, 2025, with anticipated revenues between $9.7 billion and $10.1 billion, reflecting a year-over-year growth of approximately 17.8% [1] - The expected non-GAAP earnings per share (EPS) for the fourth quarter is projected to be between 56 and 60 cents, with the Zacks Consensus Estimate at 59 cents, indicating a 1.72% increase year over year [2] Revenue and Earnings Expectations - HPE's revenue forecast for Q4 fiscal 2025 is between $9.7 billion and $10.1 billion, with a consensus estimate of $9.96 billion [1] - The expected EPS range for the fourth quarter is 56-60 cents, with a consensus estimate of 59 cents [2] - HPE's earnings have surpassed consensus estimates in three of the last four quarters, with an average surprise of 4.4% [3] Factors Influencing Performance - A decline in AI Systems revenues is anticipated due to a large deal shipped in Q3 fiscal 2025, alongside higher costs from AI rack deployments and integration expenses from Juniper Networks [5][7] - The cash conversion cycle has increased by nine days due to the inclusion of Juniper Networks, which may negatively impact HPE's financial performance [6] - Enterprises are delaying large IT spending plans due to macroeconomic issues, which could affect HPE's top line [6][7] Growth Areas - HPE's Intelligent Edge services are expected to grow, driven by the recovery in the networking market and the adoption of Wi-Fi 7 [8] - The adoption of the Aruba Edge Services Platform and HPE GreenLake is likely to contribute positively to revenues [9] - HPE's cloud business is benefiting from the shipment of over 5,000 Alletra MP arrays in 2025, with a total of 44,000 customers for its GreenLake cloud [13] Competitive Landscape - HPE faces competition from major players like Amazon and Microsoft in the cloud space, and from Dell Technologies in the server market [16][17] - HPE's stock trades at a discounted forward price-to-sales (P/S) multiple of 0.7X compared to the industry's 4.46X [11] Challenges - HPE's leverage increased to 3.1x after acquiring Juniper Networks, raising interest expenses and limiting capital returns [14] - Networking margins have reset to the low 20% range, and AI systems' profitability is constrained by high engineering and ramp costs [15] - The postponement of shipping in Q3 fiscal 2025 and a higher mix of lower-margin AI systems pose near-term challenges [18]

Core Insights - Hewlett Packard Enterprise (HPE) is experiencing significant growth in its Server segment, with record revenues of $4.9 billion, reflecting a 16% year-over-year increase and a 21% sequential increase, driven by strong AI order conversions and demand for traditional servers [1][9] Group 1: Server Segment Performance - HPE's Server revenues reached $4.9 billion, marking a 16% increase year over year and a 21% increase sequentially, attributed to robust AI order conversions and rising demand for traditional servers [1][9] - The global server refresh cycle is a major factor driving this growth, as enterprises replace outdated infrastructure with HPE's efficient servers [2] - HPE's new Gen12 servers can replace multiple older units while reducing power consumption by 65% and enhancing security with quantum-proof encryption [2][3] Group 2: Technological Advancements - The Gen12 servers allow customers to optimize data center space, reduce cooling needs, and improve system protection [3] - HPE has expanded its Gen12 compute portfolio by integrating AMD's fifth-generation EPYC processors, enhancing performance and energy efficiency [3] - HPE Compute Ops Management supports the new servers with AI-driven lifecycle management, expected to accelerate Gen12 adoption through 2026 [4] Group 3: Competitive Landscape - Dell Technologies is also benefiting from strong server demand due to digital transformation and generative AI applications, showing sequential growth in server adoption [5] - Super Micro Computer is experiencing significant growth driven by AI workloads, as data centers expand and new ones are established [6] - The demand for servers in data centers is anticipated to rise, benefiting HPE, Dell, and Super Micro Computer [7] Group 4: Financial Performance and Valuation - HPE's shares have increased by 17.1% year to date, compared to the Zacks Computer - Integrated Systems industry's growth of 64.1% [8] - HPE trades at a forward price-to-sales ratio of 0.83, significantly lower than the industry's 4.38 [10] - The Zacks Consensus Estimate for HPE's fiscal 2025 earnings is $1.89 per share, indicating a 4.5% decrease year over year, while fiscal 2026 is estimated at $2.40 per share, reflecting a 26.5% increase [11]