HPE raises forecasts on AI demand, shares fall on supply concerns

HPE's high-powered servers are in demand as cloud providers and enterprises invest in AI, server upgrades and data-center capacity.

In an interview with Reuters, CFO Marie Myers noted that supply remained constrained, with memory being the main bottleneck, followed by NAND, CPUs and drives, though HPE has signed longer-term supply agreements to improve access to components.

"Demand is far outstripping supply."

HPE's inventory of $11.82 billion at the end of July was up from $7.16 billion last year. The increase reflects "higher commodity costs and targeted purchases to support increased orders and increased backlog," Myers said.

"It's clear to us that the market, the tailwinds in AI, particularly the adoption of AI in the enterprise, is really starting to settle in," Myers said. HPE expects enterprise adoption of AI to support growth beyond the current fiscal year.