HP Inc announced plans on Tuesday to reduce its global workforce by 4,000 to 6,000 employees by fiscal 2028 as part of efforts to streamline operations and integrate artificial intelligence to accelerate product development, enhance customer service, and increase productivity.
Following the announcement, HP’s shares fell 5.5% in after-hours trading.
CEO Enrique Lores said the cuts will primarily affect teams involved in product development, internal operations, and customer support. He added that the initiative is expected to generate $1 billion in gross annual savings over three years.
Earlier this year, HP had already laid off 1,000 to 2,000 employees as part of a previous restructuring plan.
The company has seen rising demand for AI-enabled PCs, which accounted for over 30% of HP’s shipments in the fourth quarter ending October 31.
However, analysts at Morgan Stanley warned that a global surge in memory chip prices, driven by strong demand from data centers, could increase costs and squeeze profits for PC makers like HP, Dell, and Acer. The push by Big Tech to expand AI infrastructure has driven up prices for DRAM and NAND memory, both essential for servers.
Lores noted that HP expects these cost pressures to impact the second half of fiscal 2026, though the company currently has sufficient inventory for the first half. “We are taking a prudent approach to guidance for the second half, while also pursuing actions like qualifying lower-cost suppliers, reducing memory configurations, and adjusting pricing,” he said.
HP now projects fiscal 2026 adjusted earnings per share of $2.90 to $3.20, below analysts’ average estimate of $3.33. For the first quarter, adjusted EPS is expected between 73 cents and 81 cents, with the midpoint slightly below the estimated 79 cents.
The company reported fourth-quarter revenue of $14.64 billion, surpassing the estimated $14.48 billion.
