HPE Stock Surges 11% to Record High on Strong AI Server Growth

Hewlett Packard Enterprise (HPE) reported strong earnings and revenue growth, driven by a surge in demand for AI-related servers. The company saw more than 30% growth in server sales, attributed to the ongoing AI boom. HPE's free cash flow (FCF) significantly exceeded expectations, reaching $1.5 billion compared to the forecasted $1.1 billion. Year-over-year, FCF increased by $2.3 billion, although the company experienced a $4 billion year-over-year rise in accounts payable and receivable spread, which may need adjustment in the coming 12-18 months. Despite concerns over a slight rise in its cost base, HPE's stock surged 11%, hitting a record high close. However, the AI systems backlog declined nearly 30% sequentially, contrasting with Dell's 20% sequential increase. HPE's CEO emphasized a disciplined approach to AI investments.