HP Bets on AI as Cost Pressures Mount and Layoffs Deepen

HP is pushing harder into AI while tightening its cost base, announcing plans to cut between 4,000 and 6,000 jobs globally by fiscal 2028 as it reshapes operations around AI-driven productivity. 

The move follows an earlier round of 1,000 to 2,000 layoffs executed in February under an existing restructuring program, lifting total expected workforce reductions to as many as 8,000 employees over the next three years.

The strategy is designed to generate about $1 billion in annualized gross savings by 2028, with cuts expected across product development, internal operations, and customer support. The timing reflects HP’s accelerating exposure to AI hardware demand, with AI-enabled PCs accounting for more than 30% of total shipments in the fourth quarter ended October 31, a sharp pivot from traditional consumer computing.

However, the AI boom is also driving structural cost inflation. Memory prices are surging globally as data centers race to expand capacity, sending both DRAM and NAND prices higher and tightening margins for hardware manufacturers. Analysts expect the pressure to intensify into the second half of fiscal 2026, forcing companies like HP, Dell, and Acer to absorb higher input costs or pass them on through pricing.

What Does This Mean for Me?

HP now expects adjusted earnings per share for fiscal 2026 of $2.90 to $3.20, below the market consensus of $3.33. First-quarter adjusted EPS guidance of $0.73 to $0.81 also trails analyst expectations centred near $0.79.