Hewlett Packard beats Q2 results estimates on AI demand; records $1.36 billion charge

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(Reuters) -Hewlett Packard Enterprise beat Wall Street’s second-quarter revenue and profit estimates on Tuesday, driven by demand for its artificial-intelligence servers and hybrid cloud segment.

Shares of the server-maker, which also recorded an impairment charge of $1.36 billion in the reported quarter, rose 3.2% in extended trading.

The company has benefited from a surge in spending on advanced data center architecture, designed to support the complex processing needs of generative AI.

The GenAI boom has bumped up demand for Hewlett Packard’s AI-optimized servers, which are powered by Nvidia processors and can run complex applications.

For the quarter ended April 30, the company reported revenue of $7.63 billion, ahead of analysts’ average estimate of $7.45 billion, according to data compiled by LSEG.

In the quarter, Hewlett Packard addressed the execution challenges that it experienced in the prior quarter, which enabled it to drive improved margin performance in the server business, CFO Marie Myers said during a post-earnings call.

The company did not see a significant benefit from tariff-related demand pull-forward, she said.

Adjusted profit per share for the second quarter was 38 cents, beating an estimate of 32 cents per share.

Server revenue was up 5.7% to $4.06 billion and revenue for the hybrid cloud segment grew 13% to $1.45 billion.

Hewlett Packard tightened its annual revenue forecast growth to be up 7% to 9%, compared to its prior forecast of 7% to 11% growth.

“We continue to navigate a complex macroeconomic and geopolitical landscape and remain prepared to take additional action in the back half of the year to deliver against our fiscal 2025 outlook,” Myers said.

The company forecast third-quarter revenue between $8.2 billion and $8.5 billion, compared to an estimate of $8.17 billion.

(Reporting by Juby Babu in Mexico City; Editing by Pooja Desai)