HP Inc. (HPQ) is doubling down onartificial intelligence — and betting it will replacethousands of jobs in the process.
"There are many things that today wehave to do using people ... that in the future AI will do better and will do
faster," CEO Enrique Lores told Yahoo Finance.
It's not just an HP issue, he added, but an"industrywide" shift companies must embrace to stay competitive.
That transformation is reshaping HP. Thecompany on Tuesday unveiled a sweeping AI initiative tied to new restructuring
efforts. HP expects to eliminate 4,000 to 6,000 jobs globally and generate $1
billion in annualized savings by fiscal 2028.
"We're moving from pilots to specificinitiatives across multiple areas," Lores said, noting AI is accelerating
product development, improving customer satisfaction, and boosting internal
productivity.
Lores emphasized that HP's AI approach goesfar beyond chatbots, with efforts that include AI agents that automate
processes, AI-assisted software development, and systems that accelerate
operations.
The through line: Tasks once handledmanually are increasingly being handed over to AI systems.
HP expects to spend roughly $650 million onrestructuring, including about $250 million in fiscal 2026.
But the ambitious AI plan did not distractfrom what was ultimately a mixed quarter.
Fourth quarter revenue rose 4.2% to $14.6billion, slightly below the $14.8 billion analysts expected, according to
Bloomberg data. Adjusted EPS fell 3% to $0.93, in line with estimates.
The stock was up more than 2% in Tuesdaytrading before falling as much as 5.5% in after-hours action after its earnings
release. Shares remain down roughly 17% over the past 12 months, compared with
a 15% gain for the S&P 500.
Personal Systems —HP's PC business — was a bright spot, with revenue up8% to $10.4 billion, helped by Windows 10's end-of-life upgrade cycle. Units
rose 7%.
The printing segment continued to slide.Revenue fell 4% to $4.3 billion; supplies dropped 4% and hardware units fell
12%.
JPMorgan's Samik Chatterjee downgraded thestock to Neutral, arguing HP is leaving the "favorable" part of the
PC cycle and entering a "relatively tougher environment."
He expects PC shipments to rise 6.6% in2025 but fall 2.2% in 2026 as the Windows 10 replacement boom fades.
Rising DRAM and NAND costs could deepen thehit. Bank of America's Wamsi Mohan estimates HP faces a 120-basis-point gross
margin hit, a 103-basis-point operating margin hit, and $0.46 EPS drag next
year from memory inflation alone.
That means HP's AI savings may not arrivequickly enough to offset a rough 2026.
HP expects $2.8 billion to $3 billion infree cash flow in 2026 and says its AI productivity plan will strengthen the
business long term. But most of the $1 billion in savings won't materialize
until late in the decade.
Regardless, Lores is bullish on themakeover. "It's important to be in the leading front, embrace these new
technologies, transform how we work so we can stay competitive in the
future," he said.