Hewlett Packard Enterprise Co. delivered solid fourth-quarter financial results today, beating Wall Street’s expectations on both earnings and revenue, and investors responded Friday by bidding the stock up almost 10% despite tepid guidance.

The company reported earnings before certain costs such as stock compensation of 58 cents per share, up 12% from one year earlier and ahead of Wall Street’s target of 56 cents. Revenue for the period rose 15%, to $8.46 billion. Analysts had forecast sales of just $8.25 billion.

They were strong numbers and they helped to boost HPE’s button line, with its overall profit rising to $1.37 billion in the quarter, up from just $512 million in the same period one year ago.

HPE President and Chief Executive Antonio Neri hailed the company’s “exceptional” performance in the quarter, noting that it drove record quarterly sales to cap off a strong fiscal 2024 year. “We exceeded our commitments for revenue, earnings per share and free cash flow,” he added.

Over the last year, HPE, together with rivals in the server-making industry such as Dell Technologies Inc. and Super Micro Computer Inc., has been given a strong boost from the growing demand for high-powered systems that come equipped with Nvidia Corp.’s graphics processing units. The demand stems from the urgency of businesses to get the computing infrastructure needed for artificial intelligence workloads up and running in their corporate data centers.

The demand for AI servers was once again evident in HPE’s server business segment, with sales rising 32% from a year earlier, to $4.71 billion in the quarter, ahead of the Street’s target of $4.66 billion.

Neri told analysts on a conference call that, unlike some of its competitors, the company has been able to maintain its server growth rate without needing to compete on price, which meant it was also able to sustain its profitability.

“HPE manages the business with incredible discipline in terms of customer segments and pricing,” he said. “Ultimately, we participate in AI in a disciplined way.”

HPE’s hybrid cloud business segment also put in a strong shift, with sales there rising to $1.6 billion, up 18% on a sequential basis and 22% from the year-ago period. Neri said the growth stemmed from a mix of new customers and existing ones coming back for more.

The company’s intelligent edge segment added $1.1 billion in sales, down 20% from a year ago. That business, which encompasses sales of networking equipment for data centers, struggled from what Neri termed a “downcycle.”

“When we entered 2024, we understood that the market was going through a transition period driven by the digestion of infrastructure that was bought in the previous two years,” he explained.

The CEO said that the company is expecting to see the next major refresh cycle for networking begin within the next 12 to 18 months. But the segment should be boosted earlier than that, since it’s getting closer to closing on its blockbuster $14 billion acquisition of Juniper Networks Inc.

In an update, company officials told analysts that the deal received approval from regulators in the U.K. during the quarter. It has already been given the go-ahead by relevant authorities in the European Union, India, South Korea and Australia, and now just needs to convince U.S. regulators. That should happen soon, and the company maintained that the deal should close as predicted in early 2025.

As for the company’s last major segment, financial services, it delivered $893 million in sales, up 2% from a year earlier.

Constellation Research Inc. analyst Holger Mueller said HPE delivered some very good numbers and expressed optimism for its future performance. He added that, if not for the stalling networking segment, it would have delivered record revenue, not just for the fourth quarter, but for any quarter.

“The one area of concern is that HPE’s cost base rose slightly, but its bottom line was bumped up thanks to gains on equity sales, which doubled its net profit and earnings per share,” Mueller said. “The soon-to-be-completed acquisition of Juniper will give HPE another four quarters of favorable year-over-year comparisons, so things are definitely looking up.”

Looking to the next quarter, HPE said it’s looking for earnings of between 47 and 52 cents per share, the midpoint roughly in line with Wall Street’s forecast of 49 cents per share.

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