HP reported fiscal Q2 revenue of $14.4 billion, up 9% year-over-year, beating analyst expectations of $14.07 billion. Adjusted EPS of $0.86 also cleared the consensus estimate of $0.72 by a wide margin. The stock jumped as much as 15% in after-hours trading following the results.
The Personal Systems segment led the way, posting $10.2 billion in revenue, up 13% year-over-year. Commercial PC revenue rose 14%, while consumer PC revenue climbed 10%. Despite the strong revenue numbers, total PC unit volumes fell 7%, meaning higher average selling prices — not more units sold — drove the growth.
The Printing segment held flat at $4.2 billion in revenue. Operating margin there dipped to 18.3% from 19.2% a year ago.
AI PC demand was a clear tailwind this quarter. The share of AI-capable machines in HP’s PC mix rose to 44%, up from above 35% the quarter before. HP expects that figure to reach 60–70% within the next fiscal year and top 70% by fiscal 2028.
On a GAAP basis, diluted EPS of $0.49 fell short of HP’s own prior guidance range of $0.52 to $0.58. The shortfall was largely due to $365 million in restructuring and other charges.
The company is navigating a crunch in memory chip supply, driven by data center demand pushing component prices higher. CFO Karen Parkhill outlined several steps HP is taking: reconfiguring products, sourcing cheaper components, and leaning into higher-margin units, alongside price adjustments tied to rising commodity costs.
HP expects memory chip scarcity to push operating margins to a low point in Q4, with improvement expected heading into fiscal 2027.
Interim CEO Bruce Broussard said in a statement: “During the second quarter, we continued executing our future of work strategy through intelligent devices, edge AI and connected experiences while navigating rising commodity costs.”
HP pulled in its full-year adjusted EPS range to $2.90–$3.10, cutting the top end by $0.10. On a GAAP basis, full-year earnings guidance fell to $2.15–$2.45 per share, down from the previous range of $2.47–$2.77. HP also projects full-year free cash flow of $2.8–$3.0 billion.
For Q3, HP guided for adjusted EPS of $0.61–$0.71.
Several analysts updated their price targets after the print. JPMorgan raised its target from $22 to $26 while maintaining a neutral rating. TD Cowen also moved to $26 with a hold. Barclays went to $19 with an underweight rating, and Wells Fargo moved to $20 with an underweight.
Despite the earnings beat, the stock’s consensus rating remains “Reduce” with a consensus price target of $22.17, according to MarketBeat data. Two analysts rate it a strong buy, ten hold, and five have sell ratings.
HPQ traded at $24.92 ahead of the results, against a 12-month range of $17.56 to $29.55.
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