HP Enterprise CEO Antonio Neri Talks Revenue, Memory Demand and Supply
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Shares of HPE modestly higher up, about six tenths of one percent. Been chopping around in the session, but the company gave a strong sales and revenue projection for the current quarter. What's driving it? Demand. Demand for AI hardware in particular. Let's discuss with HPE CEO Antonio Neri. And let's start with that. You know, clearly there is some staying power in that demand at rack scale. You know, crystallize it for us. What are you seeing in real time? Yeah, good morning, Ed, and thanks for having me. We saw tremendous demand throughout the quarter. I think the momentum in AI continues in the build-out of the data center, but what I'm really pleased is the momentum we see in enterprise. In fact, most of our revenue in AI that we recognize in Q1 came from the enterprise segment, which shows you
two key elements. One is the adoption of agentic AI into the company's workflow. And second is the growing of inferencing. A lot of focus is always around the training and training these new models. But for us, our focus has been both the sovereign space and the inferencing and enterprise space. But in our portfolio, we saw tremendous momentum in networking. Our strategy with Journeys has paid off. And that's why we see double digits year over year growth in the order intake. You know, post Juniper networking is upside for you, right? I think you have a lot of confidence that growth will come in networking. For the audience that doesn't understand what it is you do in that space, why is networking on the rise in parallel with just kind of the broader AI hardware demand that you're seeing?
Well, I do believe, Ed, and this was the core thesis of the Juniper acquisition, that the next inflection point in term of disruption will come from the networking connectivity layer. Think about when you build a data center, you have to connect this data center to other data centers through the Internet, and that's what we call data center interconnect. Juniper has one of the most innovative products in the routing space. By the way, this past quarter, we grew mid 20 percent in order intake. Then once you are inside the data center, you need to be able to connect large amount of GPUs and CPUs together. And that's where you need the data center switching portfolio in addition to some of the other core tenants of the technology.
And there, you know, the Juniper portfolio grew mid 40% in the order intake. So I will say, for us, that has been a core tenant. That's why now they represent almost 30% of the company's revenues, but more than half of the profit. And for us, that's also an ability to raise the outlook for the remainder of the year, and also the outlook in free cash flow, because the structural margins of that business and the working capital efficiency are very, very different than the rest of the portfolio.
What factors are driving HPE's strong sales forecast?
I mean, you actually said you're not done raising prices. You talk about discipline in what is a very dynamic environment, Antonio. Talk to us about how you're weathering the supply chain issue, in particular the cost, the memory costs at the moment. How do you navigate that? Yeah, Carol, I mean, obviously the demand and supply has a huge mismatch. And you actually need to go back all the 22, 23 timeframe to understand how we got here, accelerated by the hypercycle we see in the AI space. But fundamentally, in our guidance, the new guidance, the new outlook that we raised for 2026, we included our ability to see the supply that we need to convert that into revenue and profit.
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