Key Takeaways from HPE’s AI Day

Hewlett Packard Enterprise recently hosted its AI Day at its Wisconsin facility, where the company showcased its advancements in liquid cooling technology and outlined its growth strategy in the AI sector.

During the event, Barclays emphasized HPE’s competitive edge through its 100% fanless direct liquid cooling system. This innovation is expected to significantly aid in securing AI server deals and enhancing profit margins, given the increasing demand for efficient cooling solutions. The financial firm noted that HPE has shipped over 200,000 liquid-cooled servers, placing the company ahead of its rivals. Barclays also projected that the AI total addressable market (TAM) will grow at a compound annual growth rate (CAGR) of 25% through 2027, with liquid-cooled server revenues anticipated to soar to $35 billion by 2027, up from the current $4-5 billion.

Morgan Stanley added that HPE’s extensive experience in liquid cooling, developed over five decades with its Cray division, positions the company well to capture more opportunities in the AI market. They highlighted HPE’s new 100% fanless Direct Liquid Cooling Systems Architecture as a key innovation and mentioned that HPE aims to target $171 billion in AI opportunities, particularly among tier-2 and tier-3 service providers.

According to Evercore ISI, HPE’s AI strategy, co-developed with Nvidia, is designed to streamline AI deployment for enterprises by offering fully integrated, turn-key systems. The firm expressed that the event highlighted HPE’s comprehensive capabilities in systems-level manufacturing, assembly, and testing, particularly with their 100% direct liquid cooled Exascale datacenter systems.

Bank of America noted that HPE’s extensive engineering legacy in supercomputing and liquid cooling can serve as a significant differentiator as data centers increasingly depend on these technologies for enhanced power efficiency and density. The bank maintained a Buy rating on HPE’s stock, believing there is potential for positive outcomes from synergies with Juniper, along with the prospects of higher margins and growth in AI.

Lastly, Bernstein analysts remarked that while HPE’s AI strategy is sound, they view AI storage and networking as relatively small segments. They expressed concerns about the rationale behind the acquisition of Juniper, which historically has experienced low growth and may limit HPE’s financial flexibility in the future.