Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Luckily joining us to discuss is Hewlett Packard Enterprise CEO
Speaker 2: Antonio Neerry. I look at HPE and the stock performance,
Speaker 2: and you're not getting the credit that Dell is or
Speaker 2: super Micro. I see Jensen one pat Michael Dell on
Speaker 2: the back and say, if you need a scalable service solution,
Speaker 2: you phone Michael Dell. But your margins are better. Are
Speaker 2: you finally starting to get some credit for the role
Speaker 2: you're playing in the AI infrastructure build out?
Speaker 1: Well, good morning Ed Caroline. Great to be here with
Speaker 1: you today. I completely agree with you that HP is
Speaker 1: not getting the do credit for the potential of what
Speaker 1: we do for AI and the results we have been delivering,
Speaker 1: including this past quarter.
Speaker 3: So when we.
Speaker 1: Think about our quarters, number one one, we beat revenue
Speaker 1: and we beat EPs, non appps and that was all
Speaker 1: driven by the I system revenue conversion. To your point,
Speaker 1: Karaba made almost a billion dollar a week seed the
Speaker 1: nine hundred million dollars and we have a terrific pipeline which.
Speaker 3: Is a multiple multiples of the current backlog.
Speaker 1: And now we start seeing the uptick in enterprise, which
Speaker 1: obviously HP has a significant presence. But the reality is
Speaker 1: that we have unique capabilities. When I think about the
Speaker 1: capabilities HP has in this particular inflection point AI number one,
Speaker 1: we now have to run AI a scale we have
Speaker 1: done it for decades, has been more than a supercomputer
Speaker 1: now in the generative AI and that comes on the
Speaker 1: back of our unique expertise in IP intellectual property, so
Speaker 1: we know how to build these systems, have to cool it,
Speaker 1: and then we have a unique manufacturing footprint for water cooling.
Speaker 3: As we think about.
Speaker 1: The next generation of silicon will require one hundred percent
Speaker 1: of really cooling and HP is one of those companies
Speaker 1: can do it at all.
Speaker 3: And their last panel list is the services piece.
Speaker 1: And when you talk about profitability of AI, we think
Speaker 1: about as a complete pull through. It is not just
Speaker 1: the infrastructure side, is also.
Speaker 3: The services side.
Speaker 1: And we had a very solid margin performance in our
Speaker 1: AI systems, which is part of the server segment, where
Speaker 1: we deliver eighteen percent growth year over year and we
Speaker 1: deliver an eleven percent operating profit in the guidance we
Speaker 1: provide eleven to thirteen.
Speaker 4: Your CFO talking about prudent cost discipline, is that what
Speaker 4: helps with the margin as well, Antonio, because look, let's
Speaker 4: call out JP Morgan, the analyst over there this morning
Speaker 4: saying the results in the outlook echoed similar AI server
Speaker 4: story of revenue with limited margins. They're not hearing you
Speaker 4: on the fat that you've got stronger margins.
Speaker 1: I think it's a combination of three unique things, Caroline.
Speaker 1: Number one is prudent business discipline. We have been, you know,
Speaker 1: on that journey for our own time. We pursue deals
Speaker 1: that we can add value, that we see path to profitability,
Speaker 1: and that we can drive pull through.
Speaker 3: That's number one. Number two is our complete portfolio.
Speaker 1: And so one of the key areas that I think
Speaker 1: the market doesn't understand is that we don't.
Speaker 3: Just ship servers.
Speaker 1: We actually ship the server we installed, and in many
Speaker 1: cases we run it as a part of our hPG
Speaker 1: green Lake platform and that includes an enormous amount of services.
Speaker 1: That's why you see HP green Lake also growing rapidly
Speaker 1: and the fastest growing area of HP green Lake this
Speaker 1: pass quort, which grew thirty nine percent year over yere
Speaker 1: is actually AI. And last panel list is our ongoing
Speaker 1: brutal management or cost across the company. And also we
Speaker 1: are now deploying AI in our own company.
Speaker 4: Ah, that's interesting. So you're deploying within your company geners fae,
Speaker 4: I'm sure, but who's coming to you? Who are the clients,
Speaker 4: because I'm actually surprised that where else have you been
Speaker 4: focusing if it's not enterprise.
Speaker 3: Well there is.
Speaker 1: I think about AI and three unique segments. Number one,
Speaker 1: obviously is what I call the model builders. These are
Speaker 1: the people who are building the models and need an
Speaker 1: enormous amount of acceleraty the compute to train the models
Speaker 1: from hundreds of billions of parameters to now obviously a
Speaker 1: trillion plus parameters. And in that we also mentioned yesterday
Speaker 1: that Microsoft is extending the Azure AI cloud to HB
Speaker 1: infrastructure and to serve the clients. And one of the
Speaker 1: clients just happened to be Open AI. So that's a
Speaker 1: great example of it. But there's also other service providers
Speaker 1: like Scale, Weil in France and many others we support.
Speaker 1: That's one segment, and obviously that's what a lot of
Speaker 1: the demand has been. The second segment, which is growing now,
Speaker 1: is actually sovereign cloud, and the.
Speaker 3: Third is enterprise.
Speaker 2: Antonio, there is an interesting tension happening in your industry
Speaker 2: and with your partners you know, Lisa, Sue and AMD
Speaker 2: and Jensen and Video have the GPUs and CPUs right,
Speaker 2: but they want to be systems vendors and so in
Speaker 2: the context of a server, there's not a lot left
Speaker 2: over after that. But they don't have the experience in
Speaker 2: the sales channels that you guys operate in. Business is
Speaker 2: big and small enterprise. How are you able to convince
Speaker 2: your investors that you can all grow together when you
Speaker 2: know that your biggest partners on the tech side want
Speaker 2: to do more stuff themselves.
Speaker 1: Yeah, and we have obviously the kids of experience in
Speaker 1: doing so.
Speaker 3: I think it's a multiple things. Number one. Obviously, we
Speaker 3: work with.
Speaker 1: Them to make sure their IP with our IP deliberate
Speaker 1: better experience and a better performance. And so we co
Speaker 1: engineered a lot of things and going to see here
Speaker 1: with Nvidia in particular, are the HP Discover in Las
Speaker 1: Vegas an enormous amount of innovation. We'll bring it to
Speaker 1: the market, so I hope you can join us and
Speaker 1: take a look at that. So with AMD, obviously we
Speaker 1: have long standing relationship. In fact, some of the large
Speaker 1: supercomputers with the Department of Energy has been built together
Speaker 1: with A and D. What we will bring is the
Speaker 1: infrastructure expertise, so it's not just the silicon built and
Speaker 1: a server and you and I we're chatting before the
Speaker 1: calls actually about the whole infrastructure and in that now
Speaker 1: we have unique ip when it comes down to air
Speaker 1: cool mixed cooling and directly could cooling, that's very hard
Speaker 1: to do. Second piece, you need the manufacturing.
Speaker 3: Capability to do so.
Speaker 1: HP today has one of the largest water cool manufacturing
Speaker 1: food print in the world.
Speaker 3: Okay, and as you follow the roadmap, that will be
Speaker 3: necessary in last panel.
Speaker 1: List obviously is the services piece because this system required
Speaker 1: a lot of maintenance and a lot of kind of
Speaker 1: TLC if you will, and HP knows how to.
Speaker 3: Do that scale.
Speaker 2: So Antonio Jensen one will be on stage with you
Speaker 2: and he'll give you a public endorsement.
Speaker 3: Is that right?
Speaker 1: No, I think what's going to happen is Jensen and
Speaker 1: I are super excited to announce solutions together that will
Speaker 1: advance the adoption. This is amazing technology and obviously that's
Speaker 1: where the two.
Speaker 3: Companies come together.
Speaker 1: But also doing a spectacular venue which will be at
Speaker 1: the Sphere, and so the way we're going to showcase
Speaker 1: all that innovation is going to be very engaging and
Speaker 1: I think you know the first of a kount.
Speaker 4: It's been spending some time in Las Vegas. Going again.
Speaker 4: You're back on the Enterprise CEO, Antonio and Narry.
Speaker 3: It's great to have you with us today.
Speaker 4: Thanks for joining on the Earnings