🟢 At a Glance:
Hewlett Packard Enterprise (NYSE: HPE) just dropped its Q2 FY24 bombshell, and investors are… confused. Revenue is up 📈, AI infra demand is exploding 🚀, but net earnings are down ⛔. So what’s going on at this iconic tech firm trying to be cool again?
🏢 About HPE
HPE, spun off from HP Inc. in 2015, is your dad’s old server company trying desperately to look like an AI influencer. From storage solutions to edge computing, it’s pivoting hard toward AI-native and cloud-native infra, betting on future data center wars.
🧑💼 Key Management (Aka Who’s Holding the Server Rack Together)
- Antonio Neri – President & CEO, chief evangelist of AI-native everything
- Jeremy Cox – Interim CFO, likely calculating AI ROI in real time
- Kirt P. Karros – Treasurer
- Ken Moore – Chief Technology Officer
📊 Financials: Q2 FY24 Highlights
| Metric | Q2 FY24 (Ended April 30, 2024) | YoY Change |
|---|---|---|
| Revenue | $7.2 billion | +3% |
| Gross Margin | 33.8% | -50 bps |
| Net Earnings | $314 million | -15% |
| GAAP Diluted EPS | $0.24 | – |
| Non-GAAP Diluted EPS | $0.42 | – |
| Free Cash Flow (YTD) | $230 million | DOWN |
⚠️ Even with a revenue beat, earnings fell due to higher R&D, AI infra costs, and expansion into hybrid cloud and GreenLake services.
💾 Business Segment Breakdown
| Segment | Revenue YoY | Highlights |
|---|---|---|
| Compute | +18% | Driven by AI server sales 💻 |
| Storage | -6% | Demand slowing, shift to consumption model |
| Intelligent Edge | -19% | A surprise miss – demand delays + macro softness |
| Hybrid Cloud | +4% | GreenLake as-a-service platform gaining traction |
| Financial Services | +3% | Financing AI infra deals = sweet interest income |
💰 Balance Sheet & Cash Flow
- Total Cash: $2.6 billion
- Total Debt: $11.2 billion (Yikes, that’s a heavy cart of legacy tech)
- Operating Cash Flow: Down YoY
- CapEx: Increased, mostly for AI infra ramp-up
📉 Fair Value Estimate (Forward Range): $15–$18
(Based on EV/EBITDA and peer median multiples across hybrid infra and AI hardware)
🔮 Growth & Outlook
- HPE expects AI infra to become 25%+ of Compute revenues by FY26
- GreenLake pivot is real, but needs profitability to match hype
- Full-year FY24 revenue outlook: $29B–$30.5B
- Margin headwinds likely as they go all-in on edge + AI infra expansion
🧠 EduInvesting Take
HPE is that 90s rock band trying to get TikTok famous by remixing old hits with AI. The results? Surprisingly decent… but not yet viral.
- ✅ Pivot to AI is real
- ❌ Earnings pain will persist till infra costs normalize
- 🔁 This is a multi-quarter rerating story, not a quick trade
⚠️ Risks
- AI capex cycles are lumpy, and demand visibility is weak
- Competitive pressure from Dell, Cisco, NVIDIA-integrated infra
- Debt-heavy structure limits aggressive buybacks or M&A
📅 Author: Prashant Marathe
🗓️ Date: June 4, 2025
🏷️ Tags: HPE earnings, Hewlett Packard Enterprise Q2 FY24, AI infra stocks, hybrid cloud, GreenLake, HPE analysis, tech stock results, NASDAQ updates
