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HP Inc. shares fell sharply on Tuesday after the company announced significant workforce reductions and issued weaker-than-expected guidance for fiscal year 2026. The PC and printer giant said it plans to eliminate between 4,000 and 6,000 jobs — as much as 10 percent of its global workforce — as part of a broad restructuring effort aimed at cutting long-term costs and repositioning the business amid mounting trade-related expenses.

The stock slid 6 percent in late trading following the announcement, reflecting investor concern over the company’s near-term profitability and the impact of tightening U.S. trade regulations on HP’s cost structure.

Mixed Quarterly Performance: Revenue Rises but Outlook Disappoints

HP reported revenue of $14.64 billion for the quarter ending Oct. 31, slightly ahead of analyst expectations and marking a 4 percent year-over-year increase. Adjusted earnings per share came in at 93 cents, topping estimates by one cent. Net income reached $795 million, up from $763 million in the same quarter last year, driven by strong demand for commercial systems and improved pricing in key product lines.

Despite the positive quarterly numbers, the company’s forward guidance fell short. For the first quarter of fiscal 2026, HP expects adjusted earnings per share between 73 and 81 cents, compared to expectations of 79 cents. Full-year adjusted EPS is projected to fall between $2.90 and $3.20 — well below the consensus estimate of $3.33.

HP attributed the weaker guidance primarily to higher costs associated with ongoing U.S. trade regulations affecting hardware components and supply chain routes. These added costs, the company said, will continue to pressure margins until full mitigation plans are implemented.

Business Unit Breakdown: Personal Systems Strength Offsets Printing Declines

HP’s Personal Systems division — which includes laptops, desktops, workstations, and commercial PCs — generated $10.35 billion in revenue, an 8 percent increase year over year. This result exceeded market expectations and benefited from stronger commercial demand, increased enterprise refresh cycles, and early signs of AI-driven PC replacement trends.

However, the company’s Printing division saw continued weakness, declining 4 percent to $4.3 billion. A competitive pricing environment, slower corporate upgrades, and consumer hesitancy amid higher borrowing costs all contributed to the slump. CFO Karen Parkhill noted that customers are delaying new printer purchases and that hardware margins are being pressured by aggressive discounting in the market.

Restructuring Plan: Job Cuts, Cost Savings, and Rising Memory Prices

HP expects to finish its workforce reduction plan by the end of fiscal 2028. The restructuring should generate at least $1 billion in annualized gross run-rate savings once completed. The company anticipates roughly $650 million in charges related to the restructuring, with about $250 million hitting in fiscal 2026.

This marks HP’s second major layoff cycle in two years, following similar reductions in 2022. As of December, the company employed around 58,000 people.

CEO Enrique Lores emphasized that the restructuring is aimed at improving operational efficiency while enabling HP to invest more aggressively in artificial intelligence. He highlighted opportunities to bring AI deeper into product development and customer support workflows to boost innovation and productivity.

Rising memory prices also emerged as a challenge. Lores said memory components now account for 15 to 18 percent of the cost of a typical PC — and the pace of price increases has accelerated sharply in recent weeks due to soaring demand from AI model developers and cloud providers.

Market Conditions and Consumer Migration to Windows 11

HP expects some relief from the recent end of Microsoft’s Windows 10 support in October, which is expected to drive a replacement cycle as businesses and consumers upgrade devices. Around 60 percent of HP’s installed PC base has transitioned to Windows 11, leaving a sizable portion of customers still due for upgrades — a trend HP believes could support sales over the next several quarters.

Still, HP shares remain under pressure. As of Tuesday’s close, the stock was down 25 percent year to date, in stark contrast to the broader S&P 500, which has gained 15 percent over the same period.

The company now faces a challenging balance: absorbing rising trade and component costs, executing a lengthy restructuring plan, and competing aggressively in a marketplace increasingly shaped by AI-driven hardware demand.