Hewlett Packard Enterprise (HPE) saw a surge in its stock price on Thursday following the announcement of its expanded partnership with Nvidia. This collaboration highlights the importance of close ties with Nvidia in order to capitalize on the growing demand for artificial intelligence (AI) hardware.
According to a joint statement released by the companies, the combined HPE-Nvidia technology will enable businesses to customize AI models using their own private data and deploy applications like chatbots. This generative AI offering is set to be available starting from the first quarter of 2024.
In light of this partnership, HPE shares experienced a 4.8% increase in premarket trading on Thursday, building upon the 6.4% rise seen the previous day after the release of HPE’s October-quarter earnings results.
Nvidia CEO Jensen Huang expressed enthusiasm about the expanded collaboration, stating, “Our partnership with HPE will facilitate unprecedented productivity through AI applications that leverage business data to empower accurate assistants, informed chatbots, and semantic search.”
HPE has already witnessed positive results from AI within its high-performance computing business, bolstered by its existing partnership with Nvidia. However, the stock has lagged behind the overall technology sector due to weaker business spending on IT, with a modest year-to-date rise of only 3.5% as of Wednesday’s close.
Analyst Simon Leopold of Raymond James acknowledged HPE’s position in the AI field, attributing it to the Nvidia partnership and HPE’s Slingshot RoCE networking platform. Leopold emphasized that the platform provides an alternative to the prevalent Infiniband protocol used for AI workloads. In a research note following HPE’s earnings report, Leopold set a target price of $20 for HPE shares and gave them an Outperform rating.
Furthermore, HPE revealed several other AI-related products on Thursday, including cloud offerings designed for machine learning development, data analytics, and AI-optimized file storage.
In conclusion, HPE’s expanded partnership with Nvidia in the AI hardware space has bolstered the company’s stock and positioned it as a player in the AI field. With the upcoming release of their generative AI offering and a range of other AI-related products, HPE aims to capitalize on the growing demand for AI technologies.