© Reuters. Signs for Hewlett Packard Enterprise Co., cover the facade of the New York Stock Exchange November 2, 2015. REUTERS/Brendan McDermid

(Reuters) – Hewlett Packard Enterprise (NYSE:) forecast fourth-quarter revenue below Wall Street estimates on Tuesday, at a time when demand for the company’s servers is taking a hit from soft enterprise spending coupled with fierce competition from more AI-focused rivals, sending its shares down 2.3% after the bell.

HP (NYSE:) Enterprise expects current-quarter revenue between $7.2 billion and $7.5 billion, the mid-point of which was below analysts’ expectations of $7.49 billion, according to Refinitiv data.Rival Arista Networks (NYSE:) forecast a robust quarterly revenue after delivering better-than-expected results, helped by higher demand for its cloud gear following AI push. HP Enterprise’s peer Dell Technologies (NYSE:) in July also launched a generative AI collaboration with Nvidia (NASDAQ:), expanding its Project Helix offerings of a more data secure GenAI.

The company has invested heavily to ensure its offerings are suitable for AI workloads. This has helped retain clients and add new ones as companies look to scale up their data centers to support chatbots, image generators and other AI-backed services.

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It raised its outlook for full-year adjusted earnings per share to $2.11 to $2.15 from earlier expectations of $2.06 to $2.14 per share.

On an adjusted basis, HPE earned 49 cents per share for the third quarter ended July 31, compared with expectations of 47 cents.

The Spring, Texas-based company posted quarterly revenue of $7.0 billion, beating analysts’ estimate of $6.99 billion, according to Refinitiv IBES data.


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