By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panelists are generally bearish on HPQ, citing potential margin compression due to memory cost normalization, enterprise IT spending swings, and the risk of Printing segment decline outpacing AI PC margin expansion.
Risk: Accelerating decline in the Printing segment outpacing AI PC margin expansion by late 2025.
Opportunity: None explicitly stated.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
HP Inc. (NYSE:HPQ) is one of the
11 Most Undervalued Tech Stocks to Buy Right Now.
On May 28, Reuters reported that HP Inc. (NYSE:HPQ) had second-quarter revenue growth by 9% to $14.41 billion and adjusted EPS of 86 cents, beating LSEG estimates of $14.07 billion and 71 cents. The firm said demand for artificial intelligence advanced PCs drove results.
AI PCs accounted for 44% of shipments, jumping from over 35% in the prior quarter. CFO Karen Parkhill told Reuters the company “took deliberate actions to lower memory costs” through product reconfiguration, sourcing changes, and pricing adjustments.
HP Inc. (NYSE:HPQ) guided third quarter adjusted EPS to 61-71 cents as compared to 64 cent estimates, with the midpoint slightly above consensus. The firm also projected fiscal 2026 EPS to be between $2.90 and $3.10.
manaemedia / Shutterstock.com
Reuters reported that the corporation sees operating margins bottoming out in the fourth quarter as memory chip scarcity pressures costs. The company also expects improvement in fiscal 2027 with a Windows 11 shift toward premium PCs after Windows 10 support ended in October.
HP Inc. (NYSE:HPQ) also said AI PC shipments will rise toward 60-70% next year and exceed 70% by fiscal 2028.
HP Inc. (NYSE:HPQ) is an information technology company. It works through the following Personal Systems, Printing, and Corporate Investments segments.
While we acknowledge the potential of HPQ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy.** **
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Four leading AI models discuss this article
"HPQ’s upside hinges on a durable AI-PC mix and margin resilience; without that, the 2026-2028 targets may be overly optimistic."
HPQ beat Q2 on $14.41B revenue and 86c adjusted EPS, with AI-enabled PCs at ~44% of shipments. The bulls’ thesis hinges on a durable AI-PC demand cycle, yet PCs are historically cyclical and price-competitive: a big unknown is whether AI adoption translates into lasting share gain or just a temporary mix shift. The Q3 guide (61-71c) sits near consensus, while 2026 EPS guidance of $2.90-3.10 relies on continued Windows-11 premium-PC mix and ongoing cost discipline as memory costs are pared down. The aggressive 60-70% AI-PC shipment target next year and 70% by 2028 may prove too optimistic if memory pricing normalizes or macro demand falters. Competition and enterprise mix also matter.
The AI-PC tailwind could fade as the PC cycle normalizes; if memory pricing rebounds, margins compress, or macro demand weakens, HPQ's long-run EPS targets look too optimistic.
"HPQ's current outperformance is driven by a temporary hardware refresh cycle rather than a fundamental shift in its long-term AI-driven growth trajectory."
HPQ’s 9% revenue beat is a classic cyclical recovery narrative masked as an 'AI PC' structural shift. While the 86-cent EPS print is impressive, the reliance on 'product reconfiguration' to lower memory costs suggests margin expansion is being squeezed out of supply chain efficiency rather than genuine pricing power. With AI PC shipments hitting 44%, we are seeing a front-loading of enterprise refresh cycles ahead of the Windows 10 sunset. The real risk is a post-refresh demand cliff in late 2025. Trading at roughly 10x forward earnings, the stock is cheap for a reason: it’s a hardware commodity play masquerading as a high-growth AI beneficiary, making it highly sensitive to discretionary IT spend volatility.
The Windows 11 upgrade cycle and the shift toward premium AI-enabled hardware could create a sustained, multi-year margin expansion cycle that structural bears are currently underestimating.
"HPQ's beat masks deteriorating sequential guidance and margin pressure disguised as 'deliberate cost actions'—the AI PC narrative is real but may already be priced in."
HPQ beat Q2 estimates on revenue (+9% to $14.41B) and EPS (86¢ vs. 71¢ consensus), with AI PC shipments jumping to 44% of mix. But the guidance is a yellow flag: Q3 midpoint at 66¢ sits *below* the 71¢ beat, implying deceleration. The CFO's admission of 'deliberate actions to lower memory costs' signals margin compression—they're reconfiguring products and adjusting pricing to maintain volume, not pricing power. FY26 guidance of $2.90–$3.10 EPS annualizes to ~$3.00, which at current valuations may already price in the AI PC tailwind. The real test: does the 60–70% AI PC mix by FY27 actually expand margins, or does it just slow the bleeding?
The article omits what happens if AI PC adoption plateaus before reaching 70%+ penetration, or if competitors (Lenovo, Dell) capture share in the higher-margin AI segment. Memory cost relief is temporary; if DRAM prices stabilize or rise, HP's margin recovery thesis collapses.
"HPQ's AI PC growth is credible but margin headwinds and cautious guidance limit near-term re-rating potential."
HPQ's 9% revenue beat and 44% AI PC mix signal real demand traction ahead of the Windows 11 refresh, yet Q3 EPS guidance of 61-71 cents barely clears the 64-cent consensus and explicitly flags memory scarcity pressuring margins through Q4. The 2026 EPS range of $2.90-3.10 implies only modest growth from current run rates, while the article itself concedes other AI names carry less downside. Printing segment trends and channel inventory remain unaddressed, leaving open the risk that AI PC share gains come at the expense of ASP erosion or higher component costs that offset the volume lift.
The memory-cost actions CFO Parkhill described could stabilize gross margins faster than expected, allowing the 60-70% AI PC target for FY2026 to drive re-rating well above current multiples.
"Memory-cost relief is not a durable margin driver; a rebound in memory prices or ASP pressure could snap HPQ's margin expansion even if AI-PC mix grows."
Claude, the margin tailwind hinges on 'lower memory costs' being durable. My read is the opposite risk: memory pricing could rebound, plus AI-PC ASPs may face pressure as rivals escalate discounts. Even if 60–70% AI-PC mix hits FY27, margin leverage is vulnerable to component cost normalization and enterprise IT spending swings. The stock's high multiple already prices in a case where AI-PC growth persists; a memory rebound could snap that re-rating.
"The AI PC narrative masks the ongoing structural decay of HPQ's printing segment, which limits their ability to defend margins during a component price swing."
Claude and Gemini are fixated on memory costs, but you're all missing the elephant in the room: the Printing segment. Printing remains the true cash cow, yet it is structurally declining. If HPQ is forced to subsidize AI PC growth via aggressive pricing, they lose the ability to cross-subsidize from Printing margins. The 'AI PC' narrative is a distraction from the terminal value erosion in their legacy printing business, which will ultimately dictate the valuation multiple.
"Printing erosion + AI PC margin pressure could compress FCF before AI revenue scale offsets legacy decline."
Gemini's Printing cross-subsidy argument is underexplored, but the math doesn't quite hold: Printing still generates ~$4B annual revenue at higher margins than PCs. If HPQ *loses* Printing cash flow while scaling AI PCs, that's a margin headwind—but the article doesn't show evidence of aggressive PC pricing yet. The real risk: Printing decline accelerates *faster* than AI PC margins expand, creating a cash-flow squeeze by late 2025. That's the cliff nobody's quantified.
"Printing cash-flow erosion plus required PC pricing aggression risks an unquantified squeeze by late 2025."
Gemini flags Printing's structural decline but ignores its $4B scale relative to PCs. If aggressive AI-PC pricing is required to reach the 60-70% mix target, Printing cash flows could erode faster than Claude's late-2025 squeeze scenario already implies. The missing variable is whether Windows refresh volumes can offset that double hit before memory costs rebound and compress the very margins HPQ is counting on.
The panelists are generally bearish on HPQ, citing potential margin compression due to memory cost normalization, enterprise IT spending swings, and the risk of Printing segment decline outpacing AI PC margin expansion.
None explicitly stated.
Accelerating decline in the Printing segment outpacing AI PC margin expansion by late 2025.