HP Inc. announced on October 31 that it plans to reduce its global workforce by approximately 4,000 to 6,000 jobs by fiscal 2028. This decision aligns with the company’s strategy to streamline operations and enhance its artificial intelligence (AI) capabilities. The initiative aims to expedite product development, improve customer satisfaction, and increase productivity.
During a media briefing, CEO Enrique Lores indicated that the job cuts will primarily affect teams involved in product development, internal operations, and customer support. Lores emphasized that this restructuring is expected to generate $1 billion in gross run rate savings over the next three years. This move follows a previous reduction of 1,000 to 2,000 employees in February, which was part of an earlier restructuring plan.
As demand for AI-enabled PCs rises, representing over 30% of HP’s shipments in the fourth quarter of fiscal 2023, the company faces challenges related to rising memory chip prices. According to analysts at Morgan Stanley, increased demand from data centers has led to price surges for dynamic random access memory and NAND chips, commonly used in consumer electronics. These circumstances may affect profitability for HP and similar companies, including Dell and Acer.
Lores stated that HP anticipates experiencing the impact of these price increases in the second half of fiscal 2026. He mentioned that the company currently has sufficient inventory for the first half of the fiscal year. “We are taking a prudent approach to our guidance for the second half while implementing aggressive actions such as qualifying lower-cost suppliers, reducing memory configurations, and adjusting prices,” Lores noted.
Looking ahead, HP projects its adjusted profit per share for fiscal 2026 to fall between $2.90 and $3.20, which is below analysts’ average estimate of $3.33 based on data compiled by LSEG. The company also expects its adjusted profit per share for the first quarter to range from 73 cents to 81 cents, with the midpoint falling short of the anticipated 79 cents.
In terms of revenue, HP reported $14.64 billion for the fourth quarter, exceeding expectations of $14.48 billion. This robust performance underscores the company’s ongoing efforts to adapt to changing market dynamics while navigating challenges posed by rising costs in the semiconductor sector.
