Hewlett Packard Enterprise (HPE) saw its shares plummet by 20% in premarket trading on Friday after the company revealed that its annual profit outlook would be impacted by recently imposed U.S. tariffs. This setback comes as the AI-server manufacturer navigates an intensely competitive market. New tariff measures introduced by the U.S. government have complicated supply chains. A 25% duty now applies to aluminium and steel imports from Canada and Mexico, with exemptions on certain goods expiring on April 2. Additionally, a cumulative 20% tariff on Chinese imports, enforced incrementally since February, is adding to the challenges faced by corporations.
CFO Marie Myers acknowledged the tariff-related uncertainties and their impact during a post-earnings discussion. “Recent tariff announcements have created uncertainty for our industry, primarily affecting our server business,” Myers stated. In response, the company plans to implement supply chain adjustments and pricing measures to mitigate these effects.
In a bid to control costs amid growing competition from industry rivals such as Dell and Super Micro Computer, HPE also announced workforce reductions. The AI-server market is currently grappling with costly transitions, particularly as companies adopt advanced GPUs to meet rising demand.
Despite these challenges, HPE remains relatively competitively priced compared to its peers, trading at 8.19 times its projected earnings for the next 12 months. This compares with 9.74 times for Dell and 10.71 times for Super Micro Computer. However, if premarket losses persist, HPE stands to lose over $4 billion in market value.