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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Luckily joining us to discuss is Hewlett Packard Enterprise CEO

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Speaker 2: Antonio Neerry. I look at HPE and the stock performance,

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Speaker 2: and you're not getting the credit that Dell is or

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Speaker 2: super Micro. I see Jensen one pat Michael Dell on

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Speaker 2: the back and say, if you need a scalable service solution,

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Speaker 2: you phone Michael Dell. But your margins are better. Are

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Speaker 2: you finally starting to get some credit for the role

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Speaker 2: you're playing in the AI infrastructure build out?

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Speaker 1: Well, good morning Ed Caroline. Great to be here with

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Speaker 1: you today. I completely agree with you that HP is

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Speaker 1: not getting the do credit for the potential of what

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Speaker 1: we do for AI and the results we have been delivering,

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Speaker 1: including this past quarter.

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Speaker 3: So when we.

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Speaker 1: Think about our quarters, number one one, we beat revenue

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Speaker 1: and we beat EPs, non appps and that was all

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Speaker 1: driven by the I system revenue conversion. To your point,

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Speaker 1: Karaba made almost a billion dollar a week seed the

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Speaker 1: nine hundred million dollars and we have a terrific pipeline which.

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Speaker 3: Is a multiple multiples of the current backlog.

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Speaker 1: And now we start seeing the uptick in enterprise, which

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Speaker 1: obviously HP has a significant presence. But the reality is

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Speaker 1: that we have unique capabilities. When I think about the

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Speaker 1: capabilities HP has in this particular inflection point AI number one,

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Speaker 1: we now have to run AI a scale we have

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Speaker 1: done it for decades, has been more than a supercomputer

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Speaker 1: now in the generative AI and that comes on the

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Speaker 1: back of our unique expertise in IP intellectual property, so

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Speaker 1: we know how to build these systems, have to cool it,

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Speaker 1: and then we have a unique manufacturing footprint for water cooling.

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Speaker 3: As we think about.

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Speaker 1: The next generation of silicon will require one hundred percent

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Speaker 1: of really cooling and HP is one of those companies

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Speaker 1: can do it at all.

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Speaker 3: And their last panel list is the services piece.

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Speaker 1: And when you talk about profitability of AI, we think

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Speaker 1: about as a complete pull through. It is not just

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Speaker 1: the infrastructure side, is also.

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Speaker 3: The services side.

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Speaker 1: And we had a very solid margin performance in our

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Speaker 1: AI systems, which is part of the server segment, where

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Speaker 1: we deliver eighteen percent growth year over year and we

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Speaker 1: deliver an eleven percent operating profit in the guidance we

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Speaker 1: provide eleven to thirteen.

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Speaker 4: Your CFO talking about prudent cost discipline, is that what

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Speaker 4: helps with the margin as well, Antonio, because look, let's

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Speaker 4: call out JP Morgan, the analyst over there this morning

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Speaker 4: saying the results in the outlook echoed similar AI server

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Speaker 4: story of revenue with limited margins. They're not hearing you

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Speaker 4: on the fat that you've got stronger margins.

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Speaker 1: I think it's a combination of three unique things, Caroline.

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Speaker 1: Number one is prudent business discipline. We have been, you know,

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Speaker 1: on that journey for our own time. We pursue deals

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Speaker 1: that we can add value, that we see path to profitability,

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Speaker 1: and that we can drive pull through.

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Speaker 3: That's number one. Number two is our complete portfolio.

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Speaker 1: And so one of the key areas that I think

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Speaker 1: the market doesn't understand is that we don't.

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Speaker 3: Just ship servers.

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Speaker 1: We actually ship the server we installed, and in many

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Speaker 1: cases we run it as a part of our hPG

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Speaker 1: green Lake platform and that includes an enormous amount of services.

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Speaker 1: That's why you see HP green Lake also growing rapidly

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Speaker 1: and the fastest growing area of HP green Lake this

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Speaker 1: pass quort, which grew thirty nine percent year over yere

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Speaker 1: is actually AI. And last panel list is our ongoing

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Speaker 1: brutal management or cost across the company. And also we

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Speaker 1: are now deploying AI in our own company.

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Speaker 4: Ah, that's interesting. So you're deploying within your company geners fae,

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Speaker 4: I'm sure, but who's coming to you? Who are the clients,

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Speaker 4: because I'm actually surprised that where else have you been

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Speaker 4: focusing if it's not enterprise.

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Speaker 3: Well there is.

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Speaker 1: I think about AI and three unique segments. Number one,

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Speaker 1: obviously is what I call the model builders. These are

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Speaker 1: the people who are building the models and need an

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Speaker 1: enormous amount of acceleraty the compute to train the models

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Speaker 1: from hundreds of billions of parameters to now obviously a

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Speaker 1: trillion plus parameters. And in that we also mentioned yesterday

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Speaker 1: that Microsoft is extending the Azure AI cloud to HB

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Speaker 1: infrastructure and to serve the clients. And one of the

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Speaker 1: clients just happened to be Open AI. So that's a

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Speaker 1: great example of it. But there's also other service providers

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Speaker 1: like Scale, Weil in France and many others we support.

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Speaker 1: That's one segment, and obviously that's what a lot of

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Speaker 1: the demand has been. The second segment, which is growing now,

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Speaker 1: is actually sovereign cloud, and the.

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Speaker 3: Third is enterprise.

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Speaker 2: Antonio, there is an interesting tension happening in your industry

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Speaker 2: and with your partners you know, Lisa, Sue and AMD

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Speaker 2: and Jensen and Video have the GPUs and CPUs right,

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Speaker 2: but they want to be systems vendors and so in

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Speaker 2: the context of a server, there's not a lot left

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Speaker 2: over after that. But they don't have the experience in

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Speaker 2: the sales channels that you guys operate in. Business is

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Speaker 2: big and small enterprise. How are you able to convince

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Speaker 2: your investors that you can all grow together when you

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Speaker 2: know that your biggest partners on the tech side want

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Speaker 2: to do more stuff themselves.

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Speaker 1: Yeah, and we have obviously the kids of experience in

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Speaker 1: doing so.

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Speaker 3: I think it's a multiple things. Number one. Obviously, we

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Speaker 3: work with.

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Speaker 1: Them to make sure their IP with our IP deliberate

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Speaker 1: better experience and a better performance. And so we co

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Speaker 1: engineered a lot of things and going to see here

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Speaker 1: with Nvidia in particular, are the HP Discover in Las

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Speaker 1: Vegas an enormous amount of innovation. We'll bring it to

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Speaker 1: the market, so I hope you can join us and

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Speaker 1: take a look at that. So with AMD, obviously we

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Speaker 1: have long standing relationship. In fact, some of the large

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Speaker 1: supercomputers with the Department of Energy has been built together

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Speaker 1: with A and D. What we will bring is the

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Speaker 1: infrastructure expertise, so it's not just the silicon built and

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Speaker 1: a server and you and I we're chatting before the

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Speaker 1: calls actually about the whole infrastructure and in that now

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Speaker 1: we have unique ip when it comes down to air

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Speaker 1: cool mixed cooling and directly could cooling, that's very hard

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Speaker 1: to do. Second piece, you need the manufacturing.

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Speaker 3: Capability to do so.

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Speaker 1: HP today has one of the largest water cool manufacturing

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Speaker 1: food print in the world.

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Speaker 3: Okay, and as you follow the roadmap, that will be

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Speaker 3: necessary in last panel.

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Speaker 1: List obviously is the services piece because this system required

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Speaker 1: a lot of maintenance and a lot of kind of

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Speaker 1: TLC if you will, and HP knows how to.

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Speaker 3: Do that scale.

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Speaker 2: So Antonio Jensen one will be on stage with you

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Speaker 2: and he'll give you a public endorsement.

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Speaker 3: Is that right?

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Speaker 1: No, I think what's going to happen is Jensen and

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Speaker 1: I are super excited to announce solutions together that will

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Speaker 1: advance the adoption. This is amazing technology and obviously that's

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Speaker 1: where the two.

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Speaker 3: Companies come together.

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Speaker 1: But also doing a spectacular venue which will be at

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Speaker 1: the Sphere, and so the way we're going to showcase

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Speaker 1: all that innovation is going to be very engaging and

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Speaker 1: I think you know the first of a kount.

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Speaker 4: It's been spending some time in Las Vegas. Going again.

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Speaker 4: You're back on the Enterprise CEO, Antonio and Narry.

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Speaker 3: It's great to have you with us today.

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Speaker 4: Thanks for joining on the Earnings