HPE 'Already Winning,' Poised to Gain More AI Market Share

The global artificial intelligence (AI) market is growing rapidly and HPE is well-positioned to take more AI market share in the years ahead.

HPE’s Justin Hotard

That’s according to Justin Hotard, HPE’s executive vice president and general manager of high-performance computing, AI and labs. He spoke during Thursday’s HPE Securities Analyst Meeting.

HPE’s Antonio Neri

Antonio Neri, HPE‘s CEO, said over the last three years, HPE has strategically focused its portfolio on areas of high growth and high margin. Those include intelligent edge, hybrid cloud and AI. Each will create profitable market expansion opportunities that will help HPE fuel its growth.

“Customers continue to validate our strategy, turning to us to power critical business transformations,” he said. “And even in this macroeconomic environment, we continue to see them prioritizing data-first digital transformation initiatives. And those initiatives increasingly include AI, which is invigorating today’s IT spending. We anticipate the overall total addressable market (TAM) across our portfolio will rise by nearly $100 billion from the end of fiscal year 2022 to more than $340 billion by fiscal year 2026, when we eliminate some of the crossovers because obviously you have some elements of the portfolio that can be added in different segments, and we intend to capture this growth in TAM across the megatrends of edge, hybrid cloud and AI through a mix of HPE’s business segments.”

HPE to Take More AI Market Share in Years Ahead

AI is driving the next wave of investment in innovation, resulting in value creation in the IT market and the global economy, Hotard said.

“It will have a transformative impact similar to what we saw with web, mobile and cloud,” he said. “And we are seeing demand shift dramatically as our customers realize the potential of AI to deliver business transformation.”

HPE has a “right to play and win” in AI, and it’s already winning in the market today, Hotard said.

“We already are seeing this in our sales pipeline and our orders, and in our revenue,” he said. “We deliver solutions for the AI life cycle across training, tuning and inferencing that will drive higher growth and margin expansion. AI adoption is fueling significant market growth.”

HPE is targeting three areas of the AI market, Hotard said. Those include supercomputing. AI infrastructure and AI software platform.

“Our TAM for these segments will grow at nearly 24% compound annual growth rate (CAGR) to $146 million by 2026,” he said. “By focusing on these areas, we are empowering customers to transform their businesses to dramatically enhance productivity, accelerate innovation and create new revenue models.”

HPE Supercomputing Market Leader

HPE is a market leader in delivering the world’s leading supercomputing and high-performance computing solutions, Hotard said.

“We hold the No. 1 position of performance share for the world’s 500 fastest supercomputers, and deliver the majority of the
world’s top 10 most efficient supercomputers,” he said. “Our leadership positions us to continue to capture share in the market’s forecasted double-digit growth. We will continue to invest in our supercomputing technology and leverage our global service delivery footprint.”

In terms of AI infrastructure, by 2026, this market is expected to be seven times larger than the core supercomputing market and reach $86 billion, Hotard said.

“A significant amount of this growth will be driven by AI model training, which is one of the most computationally intense workloads of our time,” he said. “Customers require powerful infrastructure capable of the scale and performance that supercomputing technologies deliver. For this reason, key features of supercomputing technologies, including management software, networking and liquid cooling, will become requirements for AI infrastructure. These are technologies where HPE has unique intellectual property that positions us to deliver differentiated solutions to customers.”

HPE also has an opportunity above the infrastructure layer in the AI software platform market, Hotard said.

“This market is expected to grow to $49 billion by 2026, and we plan to capture share through continued investment and innovation,” he said. “We will extend our current software suite and invest in new offerings to specifically target market opportunities across the entire life cycle. As this portion of our portfolio grows, we anticipate healthy margins that will be accretive to our business.”

Increased AI Market Share in Two Ways

HPE believes its strategy to focus on these three segments across the life cycle of training, tuning and inferencing will lead to
increased market share in two ways, Hotard said.

“First, through our core supercomputing business and trusted global brand, we will create new opportunities and expand our share of wallet within our existing customer base,” he said. “And second, by further building on these core offerings with purpose-built AI solutions and HPE’s global presence, we expect to attract new customers to win even more market share. In fact, it’s the combination of the market opportunities across supercomputing, AI infrastructure and the AI software platform that differentiates HPE from the competition.”

So far this year, HPE has acquired five businesses to accelerate strategy and enhance its capabilities, Neri said. Among those are OpsRamp, Axis Security and Athonet.

“When we assess opportunities to make organic and inorganic investments, we focus on the potential to drive higher level of recurring revenue and profitability,” he said. “We maintain particular interest in investment that helps us innovate and grow profitably at the edge, in hybrid cloud and AI. We will continue to be opportunistic in making beneficial and accretive acquisitions while following our disciplined, return-based framework and ensuring integration success.”