HPE CEO Antonio Neri Talks AI Revenue Forecast, Prices and Strategy

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Caroline Hyde** (0:08)
HPE stock. Can we just look at it? Skyrocketing this morning. As we see it surge after second quarter results beat expectations, it raised its full year forecast where sales could jump by an entire one third, up to 33%. That growth is being fueled, you know why, by massive demand for AI infrastructure. Joining us now, HPE president, CEO, Antonio Neri. You're up 21%.
You have lept to a record high on the stock. It is a record move for the stock, and you've added $13 billion in market cap. Just reflect for a moment on what people are calling a blowout quarter.

**Antonio Neri** (0:41)
Yeah, well, good morning Caroline. Was an exceptional quarter, as you said, right? We achieve a record break results, a number of key metrics.
We have tremendous demand across our portfolio. Our portfolio is at the intersection of networking cloud and AI, and that demand is durable. And therefore, thanks to the results of the first half, the tremendous record-breaking backlog that we have, the pipeline which remains multiples of that backlog, allows to raise the 26th guide and to provide 2027 guide six months ahead because of that durability. So we are very, very proud of this moment.

**Ed Ludlow** (1:21)
Antonio, this is a story about demand, right? An outlook, and it's, through HPE's lens, a revenue figure.
But I think there's a lot of value if you could talk us through whether that outlook for 26 and then the 27 outlook, which you say is evidence of durability, is a volume story or it's a pricing story. In other words, no great volume of servers more than you'd normally do. You can just charge a lot more for them.

**Antonio Neri** (1:51)
Well, first of all, when we talk about the outlook, we are actually pulling by two years, the 2028 outlook that we provided last October at the Security Analysis Meet in intro 2026
To give a sense, you saw that our earnings per share at the midpoint will be $3.40, which is a dollar higher than the previous guidance. Another core of that is our networking story. And the improvements we have made across the entire portfolio, a combination of course of volume in the key product segments, whether it's campus and branch, which is up almost 30 percent in orders. So the route in business, so the data center switch in business orders, which is at close to 20 percent. And then on the server side of the equation, we are up triple digits in demand, storage for the six consecutive quarter, triple digits in our private cloud portfolio, which obviously has the AI factories for enterprise continuous growth. So it is a volume story with very disciplined pricing and execution.

**Caroline Hyde** (3:00)
I mean, talking about discipline, the fact that operating profit you see going to 80 to 85 percent growth for the fiscal full year. And this in the context of memory prices just going through the roof. How are you able to navigate what could be a significant pricing pressure bottleneck still? There's a lot still to be a little bit anxious about, Antonio. What could disrupt this?

**Antonio Neri** (3:22)
Well, we need to go underneath the portfolio and look at the mix, Caroline, because now with an 11 billion dollar business in networking clearly drives a different mix in our gross margin which was record 36.9 percent.
Let's not forget that we are ahead of plan in the Juniper and Catalyst initiatives, both milestones and synergies that fuels cost of sales improvements and OPEC's improvements. Then you have, of course, you have the cost increases in DRAM and NAND, but fundamentally there is all about the demand. I have to tell you and I comment this yesterday, customers need access to this technology. You guys have covered extremely well the AI momentum both in the build out, but we were very pleased to see the acceleration of Surprise which is driven by that option, and especially in AI inferencing.

**Ed Ludlow** (4:17)
There are lots of things happening. On-prem is back. Hybrid Cloud as we just discussed with Perplexity is becoming increasingly important.
In your outlook or even in the quarter gone, was this a story about one big customer that changed the trajectory for you, or are you seeing new types of customer? It's not just a hyperscaler story anymore.

**Antonio Neri** (4:39)
No, we have been very selectively playing in the AI at scale, in terms of profitability as well as working capital. Because we need a lot of working capital, we have prioritized paying down the debt and making sure we drive the profitable growth through networking cloud and AI in enterprise and sovereign and inferencing.