Key Takeaways:
- Revenue Growth: 1.2% annually through 2029, reflecting secular PC market headwinds
- Price Projection: Based on current execution, HPQ stock could reach $24.69 by October 2028
- Potential Gains: This target implies a total return of 29.6% from the current price of $19.05
- Annual Return: Investors could see roughly 9.8% growth over the next 2.8 years
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HP Inc. (HPQ) just wrapped up fiscal 2025 with its sixth consecutive quarter of revenue growth, up 4% year-over-year. The company’s Personal Systems division drove the gains while the Print business faced continued market softness.
CEO Enrique Lores is navigating a challenging landscape marked by rising memory costs and trade headwinds. Yet HP delivered operating margin improvements in the second half of the year and announced a $1 billion AI-driven cost savings initiative that will reshape operations over the next three years.
With AI PCs now representing over 30% of shipments and the Windows 11 refresh still 40% incomplete, HP has near-term catalysts. The stock trades at $19.05 with a P/E multiple of 6.1x, well below historical averages, offering value for patient investors who can look past memory inflation pressures.
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What the Model Says for HP Stock
We analyzed HP through its transformation into an AI-powered computing and printing company managing a mature market transition.
The company is betting on AI PCs to drive premium mix shifts while expanding recurring revenue through subscriptions and services. HP’s Workforce Experience platform now monitors 48 million endpoints and remediates over 12 million IT issues monthly, creating stickier customer relationships.
Management faces headwinds from memory cost inflation, which represents 15% to 18% of typical PC costs. The company expects a $0.30 EPS impact in fiscal 2026, concentrated in the second half as existing inventory depletes.
Using a forecast of 1.2% annual revenue growth and 6.9% operating margins, our model projects the stock will rise to $24.69 within 2.8 years. This assumes a 6.1x price-to-earnings multiple.
That represents significant compression from HP’s historical P/E averages of 7.8x (one year) and 8.6x (five years). The lower multiple reflects revenue challenges as the company faces declining print volumes and memory cost pressures offsetting PC refresh tailwinds.
The real opportunity lies in executing the AI transformation strategy and expanding higher-margin recurring revenue streams across both Personal Systems and Print.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for HPQ stock:
1. Revenue Growth: 1.2%
HP’s growth faces structural challenges but has near-term catalysts.
The Windows 11 refresh continues with 40% of the installed base still on Windows 10. Management expects this tailwind to extend into fiscal 2026 and beyond, particularly in SMB and international markets where adoption lags.
AI PC penetration reached 30% in Q4 and should climb to 40-50% in 2026. These premium devices carry higher price points and drive revenue growth faster than unit growth.
The Print business remains under pressure with market declines expected in traditional hardware. HP is doubling down on Big Tank consumer printers and expanding its All-In subscription program, which approached $1 billion in annual revenue. Industrial Graphics exceeded $1.8 billion with nine consecutive quarters of growth.
2. Operating margins: 6.9%
HP is managing margin pressure from multiple fronts.
Memory costs are surging, with the company expecting minimal impact in the first half of fiscal 2026 thanks to existing inventory but meaningful pressure in the second half. Management is implementing aggressive mitigations including supplier diversification, portfolio redesign for reduced memory configurations, and strategic pricing.
The company just completed its Future Ready program, delivering $2.2 billion in cost savings versus a $1.4 billion target. Now HP is launching an AI-driven transformation expected to generate $1 billion in run rate savings over three years, with workforce reductions of 4,000 to 6,000 people.
Personal Systems margins should stay in the 5-6% range for the first half of fiscal 2026 but could dip below 5% in the second half due to memory costs. Print margins are expected in the upper half of the 16-19% range.
3. Exit P/E Multiple: 6.1x
The market values HP at 6.1x earnings currently. We assume the P/E remains flat at 6.1x over our forecast period.
The company faces secular headwinds in printing and cyclical pressures from memory inflation. Near-term catalysts from Windows 11 and AI PCs help but aren’t enough to command multiple expansion given the mature market dynamics.
As recurring revenue from subscriptions, services, and software grows to become a larger portion of the business, HP could eventually merit a higher valuation. The company generates strong free cash flow and returned $1.9 billion to shareholders in fiscal 2025.
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What Happens If Things Go Better or Worse?
Technology companies face commodity cycles and market transitions. Here’s how HP stock might perform under different scenarios through October 2030:
- Low Case: If revenue growth slows to 1.3% and net income margins compress to 4.7%, investors still see a 21.7% total return (4.2% annually).
- Mid Case: With 1.5% growth and 5.0% margins, we expect a total return of 44.8% (8.1% annually).
- High Case: If AI PC adoption accelerates and HP maintains 5.2% margins while growing at 1.6%, returns could hit 66.4% total (11.3% annually).
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The range reflects execution on memory cost mitigations, success in shifting mix to premium categories and recurring revenue, and Print stabilization timing.
In the low case, memory inflation proves worse than expected or the PC market softens beyond current projections.
In the high case, AI PC adoption drives stronger ASP growth, the company executes aggressively on the $1 billion AI savings program, and Print subscriptions gain momentum while Industrial Graphics maintains double-digit growth.
How Much Upside Does HP Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
