Enterprise
Hewlett-Packard Enterprise: Sleeper Stock with AI Potential
Hewlett Packard Enterprise (HPE) has quietly undergone a business transformation over the last few years to position itself as a beneficiary in AI servers, networking, hybrid cloud and AI software. Last quarter, HPE’s AI systems revenue doubled sequentially to $900 million with a backlog of $3.1 million. Compare this to Dell with AI server order revenue of $2.6 billion and AI server shipments of $1.7 billion. Super Micro has total revenue of $3.85 billion with “more than 50%” of this from AI or about $2 billion. As a percentage of revenue, SMCI is certainly in the lead as a pure play. However, HPE is ahead of Dell in terms of percentage of revenue at 12.5% for HPE and 7% for Dell. We’ve identified liquid cooling as a leading trend for the back half of 2024. Of those at the cross-section of servers and liquid cooling, HPE has the lowest valuation to the tune of being priced up to 67% lower.
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