Key Stats for HP Stock
- Price Change for HP stock: 1.4%
- $HPQ Share Price as of Nov. 26: $24
- 52-Week High: $37
- $HPQ Stock Price Target: $27.5
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What Happened?
HP (HPQ) stock tumbled even as the PC and printer maker beat Wall Street’s expectations for its fiscal fourth quarter.
The selloff was triggered by weaker-than-expected fiscal 2026 earnings guidance and the announcement of a major restructuring plan that will eliminate 4,000 to 6,000 jobs over the next three years.
It reported adjusted earnings per share of $0.93, just ahead of the $0.92 consensus estimate. Revenue came in at $14.64 billion, topping the $14.48 billion expectation and marking the company’s sixth consecutive quarter of revenue growth, up 4% year-over-year.
However, HP’s fiscal 2026 guidance disappointed investors, as it expects full-year adjusted earnings per share of $2.90 to $3.20, well below the consensus estimate of $3.33.
For the first quarter alone, HP guided to $0.73 to $0.81 in adjusted EPS, with the midpoint below the $0.79 consensus.
The weak outlook reflects mounting pressures from rising memory costs and ongoing trade-related challenges.
CEO Enrique Lores noted that memory costs currently represent 15% to 18% of a typical PC’s cost, and “while an increase was expected, its rate has accelerated in the last few weeks.”
HP quantified the net impact of increased memory costs at approximately $0.30 per share for fiscal 2026, with most of the pressure in the second half of the year.
The company announced it expects to reduce headcount by 4,000 to 6,000 employees by the end of fiscal 2028, representing up to 10% of its roughly 58,000-person workforce.
The restructuring is part of a broader AI-driven transformation initiative expected to generate approximately $1 billion in gross run rate savings over three years.
HP anticipates about $650 million in associated charges, with roughly $250 million hitting in fiscal 2026.
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What the Market Is Telling Us About HPQ Stock
The decline in HPQ stock reflects investor concern about margin compression from memory cost inflation and the company’s ability to offset these headwinds through pricing and operational improvements fully.
Management expects Personal Systems operating margins to stay in the 5% to 6% range in the first half of fiscal 2026 but could fall to the low end of the long-term 5% to 7% range for the full year, with Q3 and Q4 potentially dipping temporarily below 5%.
HP’s Personal Systems segment delivered strong Q4 results, with revenue up 8% to $10.35 billion, above the $10.15 billion consensus.
The business benefited from continued Windows 11 refresh momentum and accelerating AI PC adoption, which now represents more than 30% of shipments.
Management noted that approximately 60% of the installed base has transitioned to Windows 11, leaving significant runway for the refresh cycle to continue into fiscal 2026, particularly in SMB and international markets.
The Printing segment remained challenged, with revenue down 4% to $4.3 billion as market softness persisted and customers delayed hardware refresh decisions.
CFO Karen Parkhill cited a competitive pricing environment and continued global market weakness. However, the company’s Consumer Subscriptions business is approaching $1 billion in annual revenue with strong double-digit growth.
In comparison, Industrial Graphics exceeded $1.8 billion in annual revenue with nine consecutive quarters of year-over-year growth.
Management is taking multiple actions to mitigate memory cost pressures, including qualifying lower-cost suppliers, redesigning the portfolio for reduced memory configurations, accelerating AI-enabled transformation to drive cost savings, and implementing pricing increases in partnership with channel and direct customers.
HP emphasized that it has strong supplier relationships and long-term contracts, which position it well from a supply perspective, with minimal memory cost impact expected in the first half due to inventory on hand.
Despite the near-term headwinds, HP raised its quarterly dividend to $0.30 per share, marking the 10th consecutive annual increase since its 2015 separation. The company expects to generate $2.8 billion to $3 billion in free cash flow for fiscal 2026, roughly flat year-over-year despite margin pressures, driven by working capital improvements.
HPQ stock slid on cautious fiscal 2026 guidance and the announcement of significant workforce reductions. Investors appear focused on near-term margin compression from memory inflation rather than management’s confidence in navigating the challenge and driving longer-term value through AI-powered transformation initiatives.
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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!
