Growth in the take-up of artificial intelligence (AI)-based systems was among the big wins for HPE as it announced its second-quarter financial results.
The company posted Q2 revenue of $7.2bn, up 3%.
New AI servers are being delivered in as little as six weeks after the company fixes supply chain issues.
In a blog discussing the results, CEO Antonio Neri spoke about the growth of AI, particularly among HPE’s enterprise customers. “Demand for HPE’s AI offerings is accelerating at a faster pace, and our solid execution enabled us to more than double our AI systems revenue sequentially to more than $900m, helped by supply chain conversion through improved GPU [graphics processing unit] availability,” he said.
Neri added that HPE’s AI business doubled from the prior quarter, driven by a strong order book and better conversion from its supply chain.
“We tripled the number of enterprise AI customers year-over-year, now representing more than 15% of our $4.6bn of cumulative AI orders,” he said.
In the blog, Neri spoke about HPE’s leadership in water cooling technology for AI servers, and its strengths in green IT. “HPE now has four of the top 10 world’s fastest supercomputers, all of which are direct liquid-cooled,” he said. “I am also proud that we have built seven of the world’s top 10 energy-efficient systems.”
Liquid cooling
In terms of water cooling technology, he said the liquid cooling capabilities of its AI servers has resulted in more than 300 HPE patents.
The company also experienced strong demand for its GreenLake offerings, which posted an annual recurring revenue (ARR) of over $1.5bn.
“AI was the fastest growth component of ARR this quarter, while storage and networking – typically the fastest growth elements of ARR – both retained robust growth rates,” said Neri.
During the earnings call, he was asked about enterprise adoption of HPE’s AI servers. According to the transcript, posted on Seeking Alpha, enterprise customers’ interest in HPE’s AI capabilities is accelerating. “As these engagements continue to progress from the exploration and discovery phase, we anticipate additional acceleration in enterprise AI systems orders through the end of the fiscal year,” said Neri.
Supply chain constraints due to demand for GPUs has curtailed many IT leaders’ ambitions to build out their enterprise AI strategy.
Neri also spoke about better lead times on the supply of AI servers. “We feel pretty good about the ability to deliver systems [within] six to 12 weeks,” he said.
Chief financial officer Marie Myers added: “For servers, we expect improving GPU supply for AI systems and improving demand for traditional servers to drive sequential revenue increases through fiscal year 2024.”
In the blog, Neri said that along with the AI growth opportunity, HPE was also seeing indications of market recovery in the traditional and cloud infrastructure markets. “Orders for traditional servers grew sequentially and year-over-year, driven by enterprise, public sector, and SMB customers in North America and Europe – and revenue grew sequentially as customers transition to HPE ProLiant Gen 11 servers,” he said.
Its GreenLake offering has also benefited from the AI uptake among HPE enterprise IT customers. The company recently introduced HPE GreenLake for File Storage capabilities, which Neri said had options specifically targeting the unstructured data demands of AI.
