WEBVTT - HPE CEO Antonio Fabio Neri Talks Earnings and AI

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<v Speaker 1>HPE. We're wanting strong fourth quarter results and we're seeing

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<v Speaker 1>shares at a new record high. It's all around the

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<v Speaker 1>sales strength that we're seeing for service to power AI workloads.

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<v Speaker 1>How resilient is that? Let's ask Antonio and Airly HPE CEO.

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<v Speaker 1>So what's interesting about the AI server business was that

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<v Speaker 1>it's still growing fast. But is it cool sequentially? Are

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<v Speaker 1>you feeling confident about the purchases here?

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<v Speaker 2>Well, good morning, Carol, and thank you for having me today.

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<v Speaker 2>We have an exceptional quarter and obviously one of the

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<v Speaker 2>flagship elements of that quarter was AI, but I have

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<v Speaker 2>to say it was more than AI. It was also

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<v Speaker 2>a hybrid cloud business performing exceptionally well and the sort

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<v Speaker 2>of but in general because all THEMTAR we have growth

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<v Speaker 2>both on the traditional CPU and obviously on the I side,

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<v Speaker 2>but on the I demand continued to be very very strong.

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<v Speaker 2>You know, as of today, we have more than three

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<v Speaker 2>and a half billion dollars in backlog. That shows the

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<v Speaker 2>momentum that's there in the market. Now we're in a

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<v Speaker 2>significant uptake in the pipeline in enterprise AI, but in total,

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<v Speaker 2>we have a pipeline that's a multiple of the backlogs

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<v Speaker 2>so as we go into twenty twenty five, obviously there

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<v Speaker 2>is a transition to the direct liquid cool set of

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<v Speaker 2>technologies with Blackwell and Grace Blackwell, and as you know,

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<v Speaker 2>two months ago we announced a new architecture which is

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<v Speaker 2>one hundred percent fund less. Direct liquid cooling is the

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<v Speaker 2>industry first and one third more than one third of

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<v Speaker 2>that three and a half been under a back log

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<v Speaker 2>is already on black Bells. So we expect continue growth

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<v Speaker 2>as we go into twenty five.

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<v Speaker 1>How are those black Role shipments looking. How certain.

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<v Speaker 2>Well, definitely is all very consistent to what we have seen.

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<v Speaker 2>The number of customers continue to grow, The demand across

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<v Speaker 2>four different segments continue to be very solid. You know,

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<v Speaker 2>when I think about the AI, I think about four

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<v Speaker 2>distinct segments. I call it the model builders and the hyperscalers,

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<v Speaker 2>then the two your three service provider, the sovereign which

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<v Speaker 2>is growing very rapidly in terms of interest, and the

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<v Speaker 2>cell cycles a little bit longer there. But in talking

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<v Speaker 2>about large scale deployment, and we are in the process

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<v Speaker 2>to building in the UK the UK Bristol AI Cloud

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<v Speaker 2>and in Japan the ais T and then the enterprise

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<v Speaker 2>which obviously the order value is significant lower, but the

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<v Speaker 2>number of transaction is significantly higher.

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<v Speaker 1>But the supply side has been the issue with Blackwell

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<v Speaker 1>in particular. How swiftly are those shipments arriving? How on

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<v Speaker 1>track do you now feel it is?

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<v Speaker 2>Yeah, I will say, you know, the supply will come

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<v Speaker 2>in due time because of the transition that Jensen and

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<v Speaker 2>team are driving. I will not say it's problematic, It's

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<v Speaker 2>just a transition in early part of twenty twenty five.

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<v Speaker 2>Today we continue to ship you know, H one hundreds

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<v Speaker 2>and the H two hundreds. But as I said earlier, Carolyn,

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<v Speaker 2>we already have more than one third of that more

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<v Speaker 2>than three and a half billion dollars already in Blackwell.

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<v Speaker 2>And a lot of that has to do with companies

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<v Speaker 2>that lead with that technology because they want to get

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<v Speaker 2>better performance, better image density, and ultimately lower the cost

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<v Speaker 2>per training.

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<v Speaker 1>You were really interesting articulating just the breadth of demand

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<v Speaker 1>coming from there, mentioning sovereign as well as enterprise for example.

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<v Speaker 1>How resilient is that demand? What's interesting about your backlog,

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<v Speaker 1>which you say is very resilient and strong, but there

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<v Speaker 1>was a seven hundred million dollar d booking. How confident

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<v Speaker 1>are you in some of these purchases in some of

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<v Speaker 1>these deals that have been signed.

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<v Speaker 2>Yeah, So in our current more than three and a

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<v Speaker 2>half billion dollars, are very very confident. In Q four,

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<v Speaker 2>we booked one point two billion dollars of new orders

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<v Speaker 2>and we decided to book a specific orders because we

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<v Speaker 2>had specific concerns about the risk associated with that order,

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<v Speaker 2>and we have very very strong controls in place, and

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<v Speaker 2>we felt that because of the risk associated with even

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<v Speaker 2>the finance inside, we felt this was not worth the headache.

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<v Speaker 2>And honestly, we decided to focus on the number of

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<v Speaker 2>growing customers we have and allocated supply to the right customers.

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<v Speaker 2>So that's why we decided to debook the specific order.

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<v Speaker 1>Caroline, you're also doing deals, of course. We are hearing

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<v Speaker 1>confidence on June and PAN Networks acquisition for the early

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<v Speaker 1>twenty twenty five. Is that just going to sell through DOJ?

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<v Speaker 1>Do you expect with the next administration?

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<v Speaker 2>Yeah? Well, first of all, we have received pretty much

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<v Speaker 2>all the approvals around the world with what I call

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<v Speaker 2>unconditional support. Basically, it tells you that the rest of

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<v Speaker 2>the world sees this pro competitive and with the DOJ,

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<v Speaker 2>we have had a very collaborative process through throughout the

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<v Speaker 2>last several months, and we expect the transaction to close

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<v Speaker 2>in the early part of twenty twenty five, which still

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<v Speaker 2>is within the original timelines we stated when I announced

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<v Speaker 2>the deal on January tenth, which was end of calendar

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<v Speaker 2>twenty twenty four or early part of calendar twenty twenty five.

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<v Speaker 2>And so nothing gives me post that will not be

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<v Speaker 2>the case. And then in addition, for the United States,

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<v Speaker 2>this is good not just pro competitive, but also for

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<v Speaker 2>US national security because ultimately the combination Juniper n HP

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<v Speaker 2>provides a better ability for US to compete outside the

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<v Speaker 2>United States, particularly when we have Chinese competitor around the globe.

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<v Speaker 2>And remember a part of that for the United States,

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<v Speaker 2>we provide the largest supercomputers that are doing also AI

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<v Speaker 2>and that requires a lot of networking. And today i

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<v Speaker 2>Qula pac and Enterprise owns seven of the top ten supercomputers.

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<v Speaker 2>Number one, number two, number three are HP.

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<v Speaker 1>Systems, well being reflected in a new record high on

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<v Speaker 1>the share price and augustanding sounding very upbeat about eventually

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<v Speaker 1>what Juniper does in terms of accretion. We thank you,

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<v Speaker 1>Antonio and ery is the HPECO today