Hewlett Packard surges over 12% as AI-server demand powers strong results

The company's lead times - the duration between starting and completing a process - to deliver is now between six weeks and 12 weeks, CEO Antonio Neri said in a post-earnings call.

Analysts at Bernstein said this suggests potential for HPE and peer to have "very strong shipments over the next quarter or two as they deliver on backlog", but it depends upon customers being willing to take deliveries earlier.

The Texas-based company is set to add more than $2 billion to its market value based on its current price of $19.84, after it impressed investors with upbeat .

At least eight analysts have raised their price targets on the stock to between $19 and $23 after the results. Hewlett Packard trades at 8.9 times its 12-month forward earnings estimates, compared with 16.5 for Dell and 23.1 for .

The company forecast third-quarter revenue of $7.4 billion to $7.8 billion, compared with analysts' estimate of $7.46 billion, according to LSEG data.

Its rose 18% from a year earlier, to $3.9 billion in the second quarter ended April 30. Its AI-server revenue more than doubled sequentially to $900 million, and was $3.1 billion.

"We also view AI servers as dilutive to HPE's margin," analyst William Kerwin said in a note.

Separately, Dell forecast current-quarter profit below analysts' estimates last week, signaling that higher costs to build AI servers would dent its annual margins.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Mohammed Safi Shamsi)