HP Plans Significant Job Cuts Amid AI Transition

HP's Job Reduction Announcement

On Tuesday, HP, the American tech giant, revealed plans to eliminate between 4,000 and 6,000 positions globally by 2028. This decision is driven by the company's strategy to streamline operations and integrate artificial intelligence (AI) to enhance product development, boost customer satisfaction, and improve overall productivity.

Affected Departments

According to HP's CEO, Enrique Lores, the layoffs will primarily affect teams involved in product development, internal operations, and customer support. He noted, "We anticipate this initiative will yield gross run rate savings of $1 billion over the next three years." Earlier this year, HP had already reduced its workforce by an additional 1,000 to 2,000 employees as part of a previously announced restructuring effort.

Market Pressures on Consumer Electronics

The demand for AI-enabled PCs is rising internationally, representing over 30% of HP's shipments in the fourth quarter ending October 31. However, Morgan Stanley has cautioned that increasing global memory chip prices, spurred by heightened data center demand, may elevate costs and squeeze profits for consumer electronics firms such as HP, Dell, and Acer.

Challenges Ahead for HP

Lores indicated that HP is likely to face more significant challenges from price hikes in the latter half of fiscal 2026. The company currently has sufficient inventory for the first half. Reports from LSEG suggest that HP anticipates adjusted earnings per share for fiscal 2026 to fall between $2.90 and $3.20, which is below the analyst consensus estimate of $3.33.

Financial Outlook

For the first quarter, HP expects adjusted earnings per share to range from 73 cents to 81 cents, slightly below the midpoint estimate of 79 cents. In the fourth quarter, HP reported revenues of $14.64 billion, exceeding the projected $14.48 billion.