HPE's $7.6 Billion AI Backlog Is Waiting on Memory Supply to Catch Up
The company's enterprise and government customers are driving a surge in AI orders.
Hewlett Packard Enterprise (HPE) is facing a potential investment opportunity as its $7.6 billion backlog of artificial intelligence (AI) orders is contingent upon the availability of memory and storage supplies. The company reported impressive third-quarter results, leading management to raise its full-year outlook. HPE's fiscal 2027 guidance has also been adjusted, projecting at least $5 billion in free cash flow for the year.
In Q3, revenue increased by 34% year-over-year to $12.2 billion, with adjusted earnings rising 152% to $1.11 per share. However, the surge in AI orders, totaling $3.1 billion, has caused the backlog to grow to $7.6 billion. Traditional server bookings have also surged by 75% as customers purchase AI-enabled hardware. The company's success is largely dependent on memory and storage drives, which are currently in short supply, indicating that there may be a significant investment potential for HPE amidst this demand.
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