HP Inc, a major computer company, announced on Tuesday, November 25th, that it will streamline its operations by leveraging artificial intelligence (AI) to accelerate product development, increase productivity, and enhance customer satisfaction. The company also plans to lay off 4,000 to 6,000 employees globally by the fiscal year 2028.
Following the restructuring announcement, HP’s stock price fell by 5.5% in after-hours trading.
HP CEO, Enrique Lores, stated during a conference call that the layoffs will primarily affect units involved in product development, internal operations, and customer support teams. He expects this three-year plan to save approximately $1 billion.
Earlier in February, HP had already laid off an additional 1,000 to 2,000 employees.
Analysts from Morgan Stanley pointed out that with the increasing demand for AI data centers and the surge in global memory chip prices, many electronics manufacturers like HP, Dell, and Acer may face profit pressures.
In recent times, major tech companies such as Google, Microsoft, and Amazon have been aggressively expanding their AI infrastructure, causing prices of dynamic random-access memory (DRAM) and NAND flash memory commonly found in servers to soar.
CEO Lores mentioned that the company currently has sufficient inventory to meet demand for the first half of the fiscal year 2026, but anticipates potential impacts from rising memory and chip prices in the second half of the year.
Lores stated, “We remain cautious about our financial forecast for the second half of the year, while actively taking measures including utilizing low-cost suppliers, reducing memory configurations, and adjusting prices.”
As consumer demand for computers equipped with AI capabilities rises, AI-related products accounted for over 30% of HP’s shipments as of the fourth quarter ending on October 31.
According to data compiled by the London Stock Exchange Group (LSEG), HP expects adjusted earnings per share for the fiscal year 2026 to be between $2.90 and $3.20, lower than the analysts’ average forecast of $3.33. The company forecasts adjusted earnings per share for the first quarter of next year to be between $0.73 and $0.81, with the midpoint below analysts’ estimates of $0.79.
HP reported fourth-quarter revenue of $14.64 billion, surpassing analysts’ expectations of $14.48 billion.
(Reference: Reuters)