HPQ
The beat was nice. The margin warning? Not so much.
HP came in with a tidy earnings beat, but the market did that classic “cool story, but what about next quarter?” shrug. The company earned 86 cents a share on $14.41 billion in revenue, both ahead of expectations, yet shares dipped in premarket because the full-year profit outlook got nudged lower.
AI PCs are doing the heavy lifting
The bright spot is HP’s Personal Systems business, where revenue jumped 13% thanks to stronger commercial and consumer demand. AI PCs are starting to look less like a buzzword and more like an actual growth lever: they made up 44% of shipments this quarter, up from more than 35% before. HP even says that number could climb to 60% to 70% next fiscal year. Translation: the company wants a lot more of your laptops to have an AI sticker slapped on them.
Costs are the party crasher
Here’s the catch. Memory and storage costs rose sequentially, and HP says inflationary pressure should keep hanging around through the second half of fiscal 2026, along with higher energy-related input costs. To fight back, management is leaning on:
- product redesigns
- cheaper component sourcing
- targeted price increases
- sourcing optimization
- productivity initiatives
That’s corporate speak for “we’re tightening every bolt we can find.”
What investors should watch
HP narrowed its fiscal 2026 adjusted EPS outlook to $2.90 to $3.10, down from the wider prior range of $2.90 to $3.20. That still brackets analyst expectations, but the tone matters: the company is saying growth is there, just not enough to fully outrun the cost pressure. Meanwhile, HP still expects PC unit TAM to drop at a high-teens rate in the back half of the year, so the hardware market isn’t exactly throwing a parade.
Big picture: HP is proving it can grow revenue and push into AI PCs, but if memory pricing keeps climbing, the margin story could keep hijacking the headline.