HPE and KDDI to open AI data center with NVIDIA tech in Japan

HPE and KDDI announced the opening of the Osaka Sakai Data Center by early 2026, which will feature NVIDIA Blackwell-powered AI infrastructure built by HPE to support global AI application development and large language model training. This strategic partnership underscores HPE's deepening commitment to the high-growth AI compute market, evidenced by its recent 7% year-over-year server revenue increase, $1.1 billion in net new AI server orders, and an upward revision of its fiscal year 2025 earnings guidance, signaling robust operational execution and future growth potential in the AI sector.

Analysis

Hewlett Packard Enterprise (HPE) is demonstrating significant strategic execution in the high-growth artificial intelligence sector, underscored by its partnership with KDDI to launch a state-of-the-art data center in Japan by 2026. This facility will be powered by HPE-built systems featuring NVIDIA's next-generation Blackwell GB200 NVL72 platform, positioning HPE as a key enabler of advanced AI workloads for a global enterprise client base. This forward-looking initiative is supported by strong current financial momentum; the company recently secured $1.1 billion in net new AI server orders and reported a 7% year-over-year increase in server revenue to $4.1 billion. This performance has led management to raise its fiscal year 2025 earnings per share guidance to a range of $1.78 to $1.90, signaling strong confidence in its operational outlook. While the primary focus is on its NVIDIA collaboration, HPE is also diversifying its portfolio with an expansion of ProLiant servers featuring AMD EPYC processors, indicating a broad strategy to capture market share. The recent price target increase to $18 by Loop Capital Markets, despite a 'Hold' rating, acknowledges this positive operational trajectory.

Key Decisions for Investors

• Investors should view HPE's strategic pivot to AI infrastructure as a primary growth driver, supported by a $1.1 billion AI server order book and an upwardly revised full-year EPS forecast.
• The successful deployment of NVIDIA's Blackwell architecture within HPE systems for major clients like KDDI is a key catalyst to monitor, as it validates HPE's capability in the highest-end segment of the AI market.
• While fundamentals are strong, the 'Hold' rating from Loop Capital suggests that current valuation may already reflect recent positive developments, warranting a disciplined analysis of entry points for new capital.