HP Enterprise’s AI day draws mixed reaction from investors, analysts

HP Enterprise (NYSE:HPE) held its first ever artificial intelligence day on Thursday, touting its fanless direct liquid cooling system and a new server powered by a new AMD (AMD) processor. And while there was some hype going into the event, the reaction from investors and analysts has been tepid.

Shares fell fractionally in premarket trading on Friday.

“Management suggested that the fanless architecture can reduce data center cooling costs by 90% as cooling tubes touch on every aspect of the server rack, including GPUs, CPUs, server blades, local storage, and network fabric, etc,” Seeking Alpha analyst Michael Del Monte said via email.

“Essentially, HPE is positioning itself to provide a plug-and-play server rack that will be fully equipped to support the computing needs for AI testing and inferencing, whether it is hosted [on-premise] or in HPE Green Lake,” Del Monte continued.

Susquehanna analyst Mehdi Hosseini was a bit more positive, as he called HP Enterprise’s liquid cooling assets “impressive” and should help boost the company’s narrative.

“We are impressed with the assets HPE has under wrap and showcased yesterday at its HPE AI Day,” Hosseini wrote. “This could potentially place HPE as a key AI Manufacturing and Solution provider partner, though the material contribution could be at least a year out and also not discussed at the event.”

Hosseini has a Neutral rating and $20 price target on HP Enterprise.

Citi analyst Asiya Merchant, who also has a Neutral rating and $20 price target on HP Enterprise, said she too was impressed with the “scale” of the company’s direct liquid cooling capabilities.

“We believe the pace of adoption of DLC in the industry (vs air cooled) and ability to profitably drive share gains in AI will be key metrics investors will be focused on to gauge HPE’s success,” Merchant wrote in a note, adding that air cooling is still likely to account for more than 50% of the AI total addressable market by 2027.

Seeking Alpha analyst Dan Victor described the event as a “good opportunity” to update the market on current conditions ahead of its quarterly results, slated to be released late next month.