Bloomberg Audio Studios, Podcasts, Radio News.
Luckily joining us to discuss is Hewlett Packard Enterprise CEO Antonio Neerry. I look at HPE and the stock performance, and you're not getting the credit that Dell is or super Micro. I see Jensen one pat Michael Dell on the back and say, if you need a scalable service solution, you phone Michael Dell. But your margins are better. Are you finally starting to get some credit for the role you're playing in the AI infrastructure build out?
Well, good morning Ed Caroline. Great to be here with you today. I completely agree with you that HP is not getting the do credit for the potential of what we do for AI and the results we have been delivering, including this past quarter.
So when we.
Think about our quarters, number one one, we beat revenue and we beat EPs, non appps and that was all driven by the I system revenue conversion. To your point, Karaba made almost a billion dollar a week seed the nine hundred million dollars and we have a terrific pipeline which.
Is a multiple multiples of the current backlog.
And now we start seeing the uptick in enterprise, which obviously HP has a significant presence. But the reality is
that we have unique capabilities. When I think about the capabilities HP has in this particular inflection point AI number one, we now have to run AI a scale we have done it for decades, has been more than a supercomputer now in the generative AI and that comes on the back of our unique expertise in IP intellectual property, so we know how to build these systems, have to cool it, and then we have a unique manufacturing footprint for water cooling.
As we think about.
The next generation of silicon will require one hundred percent of really cooling and HP is one of those companies can do it at all.
And their last panel list is the services piece.
And when you talk about profitability of AI, we think about as a complete pull through. It is not just the infrastructure side, is also.
The services side.
And we had a very solid margin performance in our AI systems, which is part of the server segment, where we deliver eighteen percent growth year over year and we deliver an eleven percent operating profit in the guidance we provide eleven to thirteen.
Your CFO talking about prudent cost discipline, is that what helps with the margin as well, Antonio, because look, let's call out JP Morgan, the analyst over there this morning saying the results in the outlook echoed similar AI server story of revenue with limited margins. They're not hearing you on the fat that you've got stronger margins.
I think it's a combination of three unique things, Caroline. Number one is prudent business discipline. We have been, you know, on that journey for our own time. We pursue deals that we can add value, that we see path to profitability, and that we can drive pull through.
That's number one. Number two is our complete portfolio.
And so one of the key areas that I think the market doesn't understand is that we don't.
Just ship servers.
We actually ship the server we installed, and in many cases we run it as a part of our hPG green Lake platform and that includes an enormous amount of services. That's why you see HP green Lake also growing rapidly and the fastest growing area of HP green Lake this pass quort, which grew thirty nine percent year over yere is actually AI. And last panel list is our ongoing brutal management or cost across the company. And also we are now deploying AI in our own company.
Ah, that's interesting. So you're deploying within your company geners fae, I'm sure, but who's coming to you? Who are the clients, because I'm actually surprised that where else have you been focusing if it's not enterprise.
Well there is.
I think about AI and three unique segments. Number one, obviously is what I call the model builders. These are the people who are building the models and need an enormous amount of acceleraty the compute to train the models from hundreds of billions of parameters to now obviously a trillion plus parameters. And in that we also mentioned yesterday that Microsoft is extending the Azure AI cloud to HB infrastructure and to serve the clients. And one of the
clients just happened to be Open AI. So that's a great example of it. But there's also other service providers like Scale, Weil in France and many others we support. That's one segment, and obviously that's what a lot of the demand has been. The second segment, which is growing now, is actually sovereign cloud, and the.
Third is enterprise.
Antonio, there is an interesting tension happening in your industry and with your partners you know, Lisa, Sue and AMD and Jensen and Video have the GPUs and CPUs right, but they want to be systems vendors and so in the context of a server, there's not a lot left over after that. But they don't have the experience in the sales channels that you guys operate in. Business is
big and small enterprise. How are you able to convince your investors that you can all grow together when you know that your biggest partners on the tech side want to do more stuff themselves.
Yeah, and we have obviously the kids of experience in doing so.
I think it's a multiple things. Number one. Obviously, we work with.
Them to make sure their IP with our IP deliberate better experience and a better performance. And so we co engineered a lot of things and going to see here with Nvidia in particular, are the HP Discover in Las Vegas an enormous amount of innovation. We'll bring it to the market, so I hope you can join us and take a look at that. So with AMD, obviously we
have long standing relationship. In fact, some of the large supercomputers with the Department of Energy has been built together with A and D. What we will bring is the infrastructure expertise, so it's not just the silicon built and a server and you and I we're chatting before the calls actually about the whole infrastructure and in that now we have unique ip when it comes down to air cool mixed cooling and directly could cooling, that's very hard
to do. Second piece, you need the manufacturing.
Capability to do so.
HP today has one of the largest water cool manufacturing food print in the world.
Okay, and as you follow the roadmap, that will be necessary in last panel.
List obviously is the services piece because this system required a lot of maintenance and a lot of kind of TLC if you will, and HP knows how to.
Do that scale.
So Antonio Jensen one will be on stage with you and he'll give you a public endorsement.
Is that right?
No, I think what's going to happen is Jensen and I are super excited to announce solutions together that will advance the adoption. This is amazing technology and obviously that's where the two.
Companies come together.
But also doing a spectacular venue which will be at the Sphere, and so the way we're going to showcase all that innovation is going to be very engaging and I think you know the first of a kount.
It's been spending some time in Las Vegas. Going again. You're back on the Enterprise CEO, Antonio and Narry.
It's great to have you with us today.
Thanks for joining on the Earnings