HP (NYSE: HPQ) Climbs Back Into the AI Conversation After 16% Jolt

Hewlett Packard Enterprise Co. has just given the market an exciting wake-up call, surging an impressive 16% and hitting a record high. What's the secret behind this surge? HP has been busy in the server department, particularly with machines tailored for artificial intelligence work. In a market where AI is hotter than ever, HP's fiscal second-quarter revenue didn't just inch up; it climbed by 3.3% to a substantial $7.2 billion, leaving Wall Street projections trailing in its wake.

Why HP's New Servers Are A Difference Maker

The standout performer in HP's portfolio is its server business, generating a significant $3.87 billion, a figure that caught the attention of analysts. However, the real game-changer is the sales of AI-oriented systems, which saw a remarkable doubling from the first quarter, surpassing the $900 million mark. 

CEO Antonio Neri attributes this success to the growing demand and the availability of high-powered semiconductors from Nvidia Corp.. This unique selling point has propelled HP's servers to new heights.

Is HP For Real?

So, why the sudden surge? It seems HP filled a niche that its competitors left gathering dust. While Dell Technologies Inc. and Super Micro Computer Inc. were busy sprouting green arrows, HP was quietly positioning itself as the AI whisperer of the server space. With shares rising to heights not seen since the HP Inc. split in 2015, it's safe to say HP is back and here to make some noise.

Can HP maintain this momentum, or is it a fleeting success? Analysts are cautiously optimistic. While the AI-server expansion is gaining traction, there are still concerns about other business lines, particularly networking. HP's Intelligent Edge, which includes networking, reported figures slightly below expectations, indicating potential areas for improvement.

With a backlog for AI systems boasting a hefty $3.1 billion and a revised revenue outlook that's got investors perking up their ears, HP might be just getting started. 

Sean Kelland has no positions in any of the stocks mentioned. Stocks.News has no positions in any of the stocks mentioned. Please see our disclosure page for more information.