Dive Brief:
- Hewlett Packard Enterprise received a two-pronged boost from its AI server and private cloud segments during the second quarter of its 2025 fiscal year, executives said during a Tuesday earnings call. The hardware vendor saw revenue grow 6% year over year to $7.6 billion during the three-month period ending April 30.
- One-third of the hardware vendor’s AI orders were driven by enterprise demand for GPU-powered servers and private cloud systems, according HPE President and CEO Antonio Neri. The company signed $1.1 billion of net new AI systems orders and exited the quarter with a $3.2 billion backlog, Neri said.
- Enterprise AI server and networking deployments gained momentum in both on-premises and colocation data centers, according to Neri. “What we see is customers modernizing their data center, especially because they are focused on data sovereignty and compliance,” he said. Organizations are standing up infrastructure for retrieval-augmented generation, fine tuning and inferencing, he added.
Dive Insight:
As enterprises weigh their AI procurement options, the market has split between providers that are pushing customers to public cloud and vendors steering them in the direction of on-premises alternatives.
SAP, Salesforce and Workday are among the enterprise software giants driving businesses to cloud-based agentic AI. Data cloud company Snowflake gave its platform an agent-oriented overhaul earlier this week.
On the other side of the divide, on-premises private cloud is enjoying a concurrent resurgence.
HPE rolled out upgraded versions of its Morpheus virtualization software and private cloud bundle last month and announced the HPE Private Cloud AI integration with Nvidia’s enterprise AI platform. Dell, which last week reported more than $12 billion in AI server orders during the three-month period ending May 2, introduced a private cloud suite in May, too.
“We experienced exceptionally strong demand for AI-optimized servers,” Dell Vice Chairman and COO Jeff Clarke said during a Q1 2026 earnings call, noting the company shipped $1.8 billion of the units, leaving a backlog of $14.4 billion.
HPE remains entrenched in the enterprise data center side of the hybrid cloud equation, as it digs out from execution challenges that triggered a 5% workforce reduction announced during a March earnings call and other remediation efforts.
“Since our last update, we have closely monitored the changes implemented to improve profitability,” Neri said Tuesday. “This includes the rollout of new pricing analytics, increased discount scrutiny and inventory management.”
The company expects to eliminate 2,500 positions by the end of the year and ended the recent quarter with a headcount under 59,000, its lowest since splitting from Hewlett-Packard in 2015, according to EVP and CFO Marie Myers.
AI is integral to HPE’s optimization efforts. The company will use agentic tools to improve efficiency internally, Myers said.
“Within finance, HPE and Deloitte co-developed Zuora AI CFO insights agents built on Nvidia’s advanced AI stack and deployed on our own HPE private cloud AI platform,” said Myers. “We're turning data into actionable intelligence, accelerating our reporting cycles by approximately 50% and reducing processing costs by an estimated 25%.”
