Prime Highlights

• HP’s AI PC shipments hit 44 percent of total shipments, targeting 70 percent by 2028.
• Memory chip shortage will push HP’s operating margins to a low in the fourth quarter.

Key Facts

• HP holds 17.9 percent global PC market share, behind market leader Lenovo at 24.4 percent.
• HP’s stock has fallen 12.69 percent over the past year, lagging Dell’s 172 percent gain.

Background

HP reported stronger-than-expected second-quarter results, with revenue climbing 9 % to $14.41 billion, driven by rising demand for AI-optimised personal computers. Adjusted earnings per share came in at 86 cents, well above analyst estimates of 71 cents.

The company said AI PC shipments now account for 44 % of total PC shipments in the second quarter, up from over 35 % the previous quarter. HP expects this share to reach between 60 and 70 % in the next fiscal year and surpass 70 % by fiscal year 2028.

However, HP cautioned that a global memory chip shortage is pushing up costs and squeezing margins. CFO Karen Parkhill said the company took deliberate steps to manage memory costs by reconfiguring products, sourcing cheaper components, and prioritising higher-margin units. HP also adjusted prices to account for rising commodity costs.

Despite these measures, HP expects operating margins to hit their lowest point in the fourth quarter, before recovering sequentially into fiscal 2027. The company revised its full-year adjusted EPS guidance to a range of $2.90 to $3.10, narrowing from its earlier projection of $2.90 to $3.20.

HP also warned that the overall PC unit market could decline in the high teens during the second half of the year. The company plans to counter this through pricing adjustments, share gains in premium categories, and a focus on higher-margin products.

Shares jumped as much as 15 % in after-hours trading following the results. HP holds a 17.9 % global PC market share, trailing Lenovo, which leads with 24.4 %, according to IDC data.