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HPE's GreenLake Platform Benefits From Digital Transformation

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Hewlett Packard Enterprise Company (HPE - Free Report) is benefiting from a robust demand environment for its edge-to-cloud platform, GreenLake, as customers are undergoing a major digital transformation. The company’s focus on introducing more aligned products per customer needs is driving its top line.

Management believes that digitization is reinforcing the company’s strategic relationships. Its ability to provide an integrated solution for customers’ business problems is the key driver. Hewlett Packard Enterprise’s GreenLake is helping companies through their transformation processes and increasing business scale with modern technology.

We believe digital transformation will consistently bring a huge growth opportunity for HPE GreenLake. As enterprises progress in digital transformation efforts, the use of cloud services is expected to significantly shoot up in the upcoming period, thereby driving the demand for its GreenLake platform.

Rising Adoption of HPE GreenLake

HPE GreenLake offers customers better visibility into resource utilization across co-located and public cloud-based workloads. The services ensure the administration of applications and data. Moreover, the GreenLake service suite provides customers with an agile, flexible, pay-per-use cloud experience, thereby eliminating the need for any major upfront capital investment. The edge-to-cloud platform added more than 150 new customers in the last quarter.

On Jun 14, the company announced that the French cloud services provider — Iliane — selected the platform to enhance the deployment of cloud-based solutions built for regional accounts. On the same day, it revealed that the Turkey-based Managed Services Provider, Eclit, selected its edge-to-cloud platform to launch a new set of cloud services and transform part of its existing IT estate.

In March, Hewlett Packard Enterprise expanded its GreenLake edge to a cloud platform to include support for Microsoft (MSFT - Free Report) Azure Stack HCI. The new integrated system comprises scalable hyper-converged infrastructure, software and services, which are delivered to enterprise customers’ data centers or colocation facilities.

Microsoft's integrated cloud-native solution, which is delivered as a service from HPE’s GreenLake platform, not only ensures cost efficiency but also accelerates digital transformation among enterprise clients.

In January, the leading multi-brand tech solutions provider, CDW Corporation (CDW - Free Report) , selected the platform to enhance its core U.K. cloud suite of products – ServiceWorks.

With HPE GreenLake, CDW Corporation is able to flexibly check the alignment of cost & revenues, thereby improving its predictability, visibility and control over further investments in service solutions.

Nonetheless, despite strong demand for its technology solutions owing to the ongoing digital transformation wave, Hewlett Packard Enterprise might not be able to fully capitalize on opportunity due to continued supply-chain constraints. It is expected that the industry will continue to witness supply-chain constraint at least for full calendar 2022 and therefore manufacturing partners will not back to pre-pandemic level for the next two to three quarters. Therefore, the prospect for this Zacks Rank #5 (Strong Sell) company looks gloomy in the near-term.

Stock to Consider

A top-ranked stock from the broader technology sector is ON Semiconductor (ON - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for ON's second-quarter 2022 earnings has been revised to $1.26 per share from $1.05 over the past 60 days. For 2022, earnings estimates have moved north by 18% to $4.91 per share in the past 60 days.

ON's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.8%. Shares of ON have plunged 21.3% year to date.