Hewlett Packard Enterprise Co HPE shares tanked in early trading on Thursday, after the company reported its fiscal third-quarter results.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

Stifel On Hewlett Packard Enterprise

Analyst Matthew Sheerin maintained a Buy rating and price target of $22.

Hewlett Packard Enterprise reported its July quarter sales at $7.71 billion, representing 10.1% year-on-year growth and beating consensus of $7.67 billion, Sheerin said in a note.

The beat was driven by strong demand for AI servers, which grew 39% sequentially, although the higher mix of AI servers resulted in the company's gross margin of 31.8% falling short of expectations, he added.

"Overall server sales grew 35.1% y/y, offsetting soft demand within its Hybrid Cloud (-6.9% y/y) and Intelligent Edge segments (-23.0% y/y), though both units grew sequentially," the analyst wrote. Management guided to fourth-quarter sales and earnings of $8.1 billion to $8.4bn billion and 52 to 57 cents per share, respectively, he stated.

Check out other analyst stock ratings.

JPMorgan On Hewlett Packard Enterprise

Analyst Samik Chatterjee said in a note that the company's second-quarter gross margin is likely to stroke investor concerns around heightened competition and aggressive pricing in the AI server market. "That said, HPE's execution was superior to peers," with robust cost discipline enabling the company "to meet its promise for Server segment margins despite higher mix of AI Server revenues," he added.

Hewlett Packard Enterprise's AI orders accelerated, which bodes well for its presence in the AI Server market with large data center customers, the analyst stated. AI demand and cyclical recovery in traditional servers, storage, and networking are positives for expected revenue outcomes over the medium-term

HPE Price Action: Shares of Hewlett Packard Enterprise had declined by 6.50% to $17.55 at the time of publication on Thursday.

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Photo: Courtesy Hewlett Packard Enterprise