Hewlett Packard Enterprise (NYSE:HPE) held its AI Day at its Wisconsin facility, where the company showcased its abilities in liquid cooling technology and outlined its growth strategy in the AI market.
According to Barclays, the event highlighted HPE's differentiation through their 100% fanless direct liquid cooling system, which could play a crucial role in AI server wins and margins as the demand for efficient cooling solutions rises.
They noted that HPE has already shipped over 200,000 liquid-cooled servers, positioning it ahead of competitors. Barclays explained that HPE estimates the AI total addressable market (TAM) to grow at a 25% CAGR through 2027, with liquid-cooled servers projected to reach $35 billion by 2027, up from $4-5 billion today. The bank also said the company's broad offerings across compute, storage, and networking further boost its competitive edge.
Morgan Stanley added that HPE's expertise in liquid cooling, built over 50 years with Cray, positions the company to capture a larger share of the AI market. They stated that HPE's new 100% fanless Direct Liquid Cooling Systems Architecture was introduced as a key innovation, with the company targeting $171 billion AI opportunities, particularly in tier-2 and three service providers and sovereigns.
According to Evercore ISI, HPE's AI strategy, co-engineered with Nvidia (NASDAQ:NVDA), simplifies AI deployment for enterprises and includes fully integrated, turn-key systems. Overall, the firm said the event left them "with newfound appreciation of HPE's systems level manufacturing, assembly, and testing capabilities – particularly their 100% direct liquid cooled Exascale datacenter systems."
Bank of America said its takeaway from the event is that "HPE has a rich engineering legacy around supercomputing and 100% direct liquid cooling (DLC) that can serve as a differentiator as data centers increasingly rely on liquid cooling to enable higher power efficiency and higher density solutions." The bank maintained a Buy rating on the stock as it sees upside from Juniper synergies, structurally higher margins and upside from AI.
Finally, Bernstein analysts stated that "HPE's AI strategy makes eminent sense." However, the firm continues to see "AI storage and networking as relatively small, and struggle with the rationale of buying Juniper, which historically has had low growth, and will limit HPE's financial flexibility going forward."