HPE CEO Antonio Neri: ‘AI Is Booming,’ 2024 Shaping Up To Be ‘The Year of AI Revenue Growth’

HPE exited the fiscal year with $2.4 billion in AI orders related to training AI models, up from just $100 million at the start of the fiscal year, said HPE CEO Antonio Neri. ‘There is significant growth, and the pipeline is massive,’ he said.

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Hewlett Packard Enterprise CEO Antonio Neri Tuesday said the hybrid cloud powerhouse is benefitting from a “booming” AI market with a significant uptick in AI related computing infrastructure and services.

“AI is booming,” said Neri in an interview with CRN as HPE reported a 37 percent increase in high performance computing and AI to $1.2 billion for its fourth fiscal quarter, ended Oct. 31. “It is exploding.”

HPE exited fiscal year 2023 with $2.4 billion in AI orders related to training AI models, up from just $100 million at the start of the fiscal year, said Neri. “There is significant growth, and the pipeline is massive,” he said.

Neri said in the last several weeks alone HPE added $600 million in incremental AI orders. “Clearly AI is stronger than we ever imagined,” he said.

“Demand in our AI solutions is exploding,” said Neri in a call with financial analysts. “We saw a significant uptake in customer demand in recent quarters for accelerated compute infrastructure and services. In Q4, orders for servers that include Accelerated Processing Units (APUs) represented 32 percent of our total server order mix, up more than 250 percent from the beginning of fiscal year 2023.”

APUs, including GPU-based servers, represented 25 percent of HPE’s total server order mix in fiscal 2023. HPE’s AI and supercomputing business, meanwhile, was up 25 percent in the fiscal year, ending with the largest order bookings ever, totalling $3.6 billion in orders.

HPE expects AI orders to accelerate even further in the second half of its new fiscal year, which began on November 1. “2024 will be the year of AI revenue growth,” said Neri.

“We anticipate demand next fiscal year will remain very strong,” said Neri. “We will likely have a large order backlog until GPU supply is less constrained.”

Neri said he expects AI to be a “huge driver of repatriation” from public clouds. “If you have data distributed across multiple estates, it is very hard to really train and fine tune the models when you have data everywhere,” he said. “Our focus there is really providing an automated data pipeline with our unified analytics platform.”

GreenLake Momentum Continues

Besides the strong AI bookings, HPE reported intelligent edge sales were up 41 percent to $1.4 billion. “Intelligent edge was rampant,” he said. “It now represents 18 percent of the total company revenue in the full fiscal year and 39 percent of the total company profit.”

As for GreenLake, HPE reported fourth-quarter annualized revenue run rate of $1.3 billion, up 37 percent from the prior year. HPE added 2,000 new GreenLake customers, bringing the total customer base to 29,000 with total contact value exceeding $13 billion.

Pat O’Dell, general manager and managing partner for Clinton, N.J.-based CPP Associates, the 2023 GreenLake North America Partner of the Year, said HPE is positioned to capture a a big portion of the AI market.

“HPE has proven they have an edge in high performance compute with Cray and SGI,” he said “They have the compute firepower on their side. No one is stronger in compute. AI is doing lots of computations and moving data around quickly. It is really compute at a different level.”

The GreenLake capability provides the perfect vehicle for building AI solutions, said O’Dell. “HPE has an advantage with the GreenLake model and an advantage with the technology,” he said. “I would not bet against HPE on AI.”

As for GreenLake, CPP is seeing a significant acceleration in the ability to provide quick quotes for HPE GreenLake, said O’Dell. “The process has been speeded up dramatically,” he said. “To get to the final and best pricing has gone from potentially weeks to hours and days. It’s a big deal. We are seeing things moving faster, and the pricing is more competitive. We are bullish on GreenLake. The bottom line is HPE has a very competitive solution that adds a lot of value.”

For the fourth quarter, HPE reported non-GAAP earnings per share of 52 cents on sales of $7.4 billion. That compares to the Zacks consensus estimate of 50 cents on sales of $7.35 billion.

HPE shares were up four cents to $15.56 in after hours trading.

For fiscal year 2023, HPE reported record non-GAAP earnings per share of $2.15, up 6 percent from the prior fiscal year, on sales of $29.1 billion, up two percent and 5.5 percent in constant currency.

“Our steady execution resulted in higher revenue, further margin expansion, larger operating profit and record-breaking non-GAAP diluted net earnings per share and free cash flow, which are the highest in the company history,” said Neri. “We delivered extraordinary innovation to customers across the entire portfolio, which is making HPE more relevant than ever.”