HP delivered strong fourth-quarter fiscal 2025 results that obscured deeper structural challenges confronting the technology giant. The company reported $14.6 billion in quarterly revenue, exceeding Wall Street expectations, yet announced plans to eliminate 4,000 to 6,000 employees globally by 2028 as part of an ambitious artificial intelligence restructuring initiative. While significant, this workforce reduction represents a smaller scale than HP’s previous major restructurings, including the 2022-2025 Future Ready Transformation (9,400 jobs) and the 2019 announcement of 7,000-9,000 layoffs. This contradiction—solid current performance coupled with aggressive workforce reductions and disappointing forward guidance—reflects the tension many technology companies face as they race to embed AI capabilities while managing near-term profitability pressures.​
Personal Systems Division Accelerates
HP’s Personal Systems segment emerged as the clear growth engine, with revenue climbing 8% year-over-year to $10.4 billion. Unit sales increased 7% overall, driven by robust demand for consumer and commercial PCs alike. The Windows 11 refresh cycle proved particularly potent, with AI-enabled PCs now representing more than 30% of HP’s quarterly shipments. Approximately 60% of HP’s installed PC base has already transitioned to Windows 11, leaving substantial runway for replacement purchases through 2026. This structural tailwind provides meaningful support for volume growth, though analyst forecasts suggest PC shipment growth will moderate to 2.2% in 2026 after expanding 6.6% in 2025.​
Printing Segment Continues Deteriorating
In sharp contrast, HP’s Printing segment experienced continued weakness, with revenue declining 4% year-over-year to $4.3 billion. Hardware unit sales plummeted 12%, while printing supplies revenue fell 4%, reflecting longer-term trends in office automation and declining paper consumption. This persistent decline underscores HP’s vulnerability to fundamental shifts in workplace technology and represents an ongoing structural headwind that operational efficiency improvements alone cannot fully offset.​
Ambitious AI Restructuring Plan Unveiled
CEO Enrique Lores announced a comprehensive transformation designed to position HP as an AI-first organization. The restructuring targets elimination of approximately 10% of HP’s 58,000-person workforce through fiscal 2028, with the company projecting $1 billion in gross run-rate savings by that date. However, most benefits will materialize only in fiscal 2027 and 2028, creating near-term financial headwinds. HP expects approximately $650 million in total restructuring charges, with roughly $250 million anticipated during fiscal 2026 alone, including severance packages, facility consolidations, and technology infrastructure investments.​
The AI strategy extends far beyond simple automation, encompassing sophisticated AI agents, streamlined business processes, and AI-enhanced software development tools. This breadth of transformation explains management’s view that substantial workforce reductions are necessary to remain competitive.
Memory Costs and Margin Pressure Threaten 2026
Rising memory chip prices present an immediate and severe challenge to HP’s profitability. CEO Lores acknowledged that memory price increases have accelerated in recent weeks, with expectations for further inflation through mid-2026. This cost pressure directly contributed to HP’s weak forward guidance, which projected adjusted earnings per share of $2.90 to $3.20 for fiscal 2026.​
HP is pursuing multiple mitigation strategies, including supply chain diversification, qualifying lower-cost memory suppliers, and implementing designs requiring less memory per device. The company also secured a $53 million CHIPS Act grant to support semiconductor production at its Oregon facility, supporting approximately 250 jobs while strengthening U.S. semiconductor supply chains. HP maintains adequate buffering against near-term memory price spikes, though the company faces sustained cost pressures in the second half of fiscal 2026.​
Market Reaction and Analyst Downgrades
HP’s forward guidance triggered swift and coordinated downgrades from major investment banks. Goldman Sachs reduced its price target from $28 to $24, while Bank of America Securities cut from $29 to $26. Morgan Stanley downgraded HP to “Underweight” with a $21 price target, forecasting a transition to a tougher PC cycle. JPMorgan maintained a “Neutral” rating while lowering its price target. HP shares plummeted more than 5% in extended trading and have declined 17-25% year-to-date.​
Path Forward Amid Industry-Wide Transformation
HP’s restructuring announcement arrives amid a broader wave of technology sector workforce reductions throughout 2025. Amazon announced plans to eliminate 14,000 corporate positions in October, while Apple cut dozens of sales roles in late November. Industry trackers report over 113,000 roles eliminated across 231 technology companies in 2025.​
Despite these challenges, HP maintained significant capital returns to shareholders during fiscal 2025, returning $1.9 billion through dividends and share repurchases, signaling management confidence in long-term recovery. The company’s success depends on executing its phased restructuring while protecting profitability during the critical, memory-price-challenged second half of fiscal 2026.​
Sources:
HP Inc. Fiscal 2025 Fourth Quarter Earnings Press Release, November 25, 2025
HP Inc. Investor Relations Q4 2025 Earnings Presentation
Reuters: HP Announces 6,000 Job Cuts and AI Restructuring Plan, November 25, 2025
Bloomberg: HP Stock Falls as Profit Outlook Misses Estimates, November 25, 2025
CNBC: HP Inc. Shares Fall on Weak Guidance and 6,000 Employee Cutbacks, November 25, 2025
Goldman Sachs Equity Research: HP Inc. Price Target Adjustment, November 26, 2025
Morgan Stanley Equity Research: HP Inc. Sector Analysis, November 2025