Huihe (HPE), who was late for a long time in the AI server rally, finally started running. After the release of the second quarter financial report, Huihe's stock price rose 15.28% in delayed trading on Tuesday's US stock market, reaching a historic high of $20.290. The previous peak was $20.004 in February 2017.
However, the stock prices of Dell and AMD, the server peers of Huiyu, have risen by 77% and 171% respectively this year, while Huiyu's stock price has only risen by 3.7%.
Huihe's second quarter financial report shows that benefiting from strong demand for AI servers, its net revenue for the second quarter ended April 30 was $7.20 billion, a year-on-year increase of 3.3%, exceeding analysts' consensus expectation of $6.82 billion. The adjusted earnings per share were $0.42, exceeding the analyst's average expectation of $0.39.
Huihe's strong performance is mainly attributed to its server business, which generated $3.87 billion in revenue, exceeding the average analyst expectation of $3.45 billion. Among them, the sales of AI server systems exceeded $900 million, doubling from the first quarter.
Hui and CEO Antonio Neri said that this is thanks to the increase in demand for Nvidia chips and the improvement in supply.
During a conference call after the performance announcement, Hui and CFO Mary Miles stated that the company's AI server system currently has a backlog of orders of $3.1 billion. And Dell's data last week was $3.8 billion.
Miles stated that the demand for artificial intelligence is constantly expanding in terms of geography and customer base, and Huiyu has a rich product portfolio and experience.
Although Nvidia chips can currently be water-cooled, Miles believes that once the Blackwell series is launched, direct liquid cooling will become more necessary. "For customers, this will be a true differentiation factor as the management of these data centers will become quite complex."
Huihe has raised its annual performance forecast, with revenue increasing by 1% to 3% at a constant exchange rate. The adjusted earnings per share are between $1.85 and $1.95, compared to the previous expectation of $1.82 to $1.92.
However, Hui's intelligent edge services, including network services, are dragging down performance. The revenue of the intelligent edge business in the second quarter was $1.09 billion, lower than the average expectation of $1.25 billion. Huihe announced in January this year that it plans to acquire Zhanbo Network for $14 billion to enhance its network products. Neili stated that it is expected that customer demand will improve over the course of the year.