Thanks to a surge in artificial intelligence, leaders at Spring-based Hewlett Packard Enterprise Co. (NYSE: HPE) believe the company’s total available market will cross the $300 billion threshold by 2026.
HPE leadership delivered the findings at the company’s Oct. 19 securities analyst meeting. HPE CEO Antonio Neri said the AI sector was an opportunity for expansion across all of the company's sectors.
“HPE strategies aligned to the significant market trends we see today around edge, hybrid cloud and AI, all of which will create profitable market expansion opportunities that will help us fuel our growth,” Neri said.
HPE predicted that its AI business will see compound annual growth rates ranging from 10% for its supercomputer subsector to 32% for its AI platform businesses. The total available market is expected to grow from $62 billion in 2022 to $146 billion in 2023, nearly tripling across the time period.
Justin Hotard, executive vice president at HPE and head of the company’s High Performance Computing and Artificial Intelligence business unit, highlighted the AI software and infrastructure segments as growth opportunities. The AI infrastructure market is anticipated to hit $86 billion in 2026, and Hotard predicted it would become seven times larger than HPE’s core supercomputing market.
“A significant amount of this growth will be driven by AI model training, which is one of the most computationally intense workloads of our time,” Hotard said. "Customers require powerful infrastructure capable of the scale and performance that supercomputing technologies deliver.”
Meanwhile, Fidelma Russo, chief technology officer at HPE, said HPE’s hybrid cloud platform Alletra is being engineered to meet the additional demands AI would place upon standard data cloud services. As part of HPE's business restructuring announced last month, Russo was tapped to lead the new Hybrid Cloud unit.
“We have focused on three critical customer needs,” Russo said. “(First,) AI-powered monitoring and observability for 'day two' operations and beyond, through our acquisition of OpsRam. (Second,) Unified data access through our HPE Ezmeral Data and Analytics Suite, and that helps customers move and transform their data for use in AI and other applications. Then, data lifecycle management and protection through our suite of offerings, including Zerto Disaster Recovery.”
Neri and other leaders also highlighted AI’s importance to the company’s FY 2023 business in HPE’s most recent earnings call in August. The company brought in over $7 billion in fiscal Q3 2023 revenue, and interim CFO Jeremy Cox said during the August earnings call that AI was the primary driver in HPE’s 122% year-over-year growth in software-as-a-service deals.
“We expect AI deals to provide gross margin rates above historical levels,” Cox said during the earnings call. “We believe building and operating large AI models requires unique computational capabilities, including silicon and software that our HPE Cray supercomputers and (high-performance computing) and AI solutions are extremely well positioned to enable.”
Cox, HPE's senior vice president, corporate controller and chief tax officer, has held the interim CFO role since former CFO Tarek Robbiati stepped down after five years to become the CEO of California-based RingCentral Inc. (NYSE: RNG) in August. HPE is searching for a replacement and named Cox, who serves as senior vice president, corporate controller and chief tax officer, to the interim CFO position.
Robbiati's departure and HPE's recent restructuring are just the latest of several changes the company has gone through in recent years.
Following Neri’s appointment as CEO in 2018, HPE announced plans to build a new office in City Place, the master-planned community then known as Springwoods Village. Two years later, the company moved its global headquarters from San Jose, California, to its previous Houston office near Highway 249 before moving employees into the City Place campus in early 2022.
HPE is the largest technology company headquartered in the Houston region. It ranked No. 10 on the Houston Business Journal’s 2023 Largest Houston-Area Public Companies List, based on the company’s fiscal year 2022 revenue of $28.5 billion.
