HP Inc (HPQ) stock dropped 9.3% in after-hours trading on Tuesday, falling to $27.68, after the company posted its fiscal third-quarter results for the three months ending in July.
The drop surprised some, given that HP beat on both earnings and revenue. The company reported EPS of $0.83, beating the analyst estimate of $0.66 by $0.17. Revenue came in at $15.7 billion, well above the consensus estimate of $14.34 billion.
HP’s stock closed the regular session at $30.52 before the after-hours selloff.
HP $HPQ Q3’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $15.7B (Est. $14.38B) 🟢; +12.5% YoY
🔹 Adj. EPS: $0.83 (Est. $0.69) 🟢; +11% YoY
🔹 Free Cash Flow: $1.6B (Est. $597M) 🟢Raises FY26 Guide:
🔹 Adj. EPS: $3.19-$3.29 (Est. $3.04) 🟢
🔹 Free Cash Flow: $3.0B-$3.2B (Est. $2.89B) 🟢…— Wall St Engine (@wallstengine) August 26, 2026
The personal systems division, which covers mainly laptop sales, drove the revenue beat. It brought in $11.8 billion versus the $10.6 billion analysts had expected.
Printer revenue came in at $3.9 billion, roughly in line with estimates but slightly below the $4.0 billion posted in the same period last year.
Tariff refunds gave earnings a boost too. HP said they added an 11-cent favorable impact per share. Even stripping that out, though, HP still beat estimates.
Despite the strong revenue numbers, unit sales told a less flattering story. Personal systems unit sales fell 16% during the quarter. Consumer unit sales dropped even harder, down 19%.
That’s a sharp deterioration from the prior quarter, when personal systems unit sales fell 7% overall and consumer units were down 8%.
Print unit sales were down 7%, a slight improvement from the prior quarter’s 8% decline.
The culprit is largely what analysts have taken to calling “RAMageddon.” AI data centers are consuming memory chip supply at a rapid pace, leaving less available for PC makers like HP. With memory accounting for a major cost in laptops and desktops, supply has tightened and prices have risen.
HP’s PC and laptop business makes up around 70% of total revenue, so the memory crunch hits the company hard.
Analyst sentiment on HPQ has been cooling. Only 2 of the 19 analysts tracked by FactSet currently rate the stock a Buy. That’s down from 7 out of 19 just two years ago.
CFRA analyst Brooks Idlet had flagged concern ahead of earnings, writing that the firm expected “a worsening decline in FY27 as memory costs increase.” He noted that further price increases on PCs could make HP’s products “harder to justify” for buyers.
HP has raised prices to offset higher memory costs, and corporate demand for Windows 11 and AI-capable machines has provided some support. But that tailwind appears to be fading.
On the positive side, HP raised its full-year EPS guidance. The company now expects fiscal 2026 EPS of $3.19 to $3.29, up from its prior range of $2.90 to $3.10. The analyst consensus had been sitting at $3.04.
HP’s stock is up about 10% so far this year, but remains roughly 20% below its 2024 peak near $38 a share.
HP saw 8 positive EPS revisions and 2 negative EPS revisions in the last 90 days, and carries a “good performance” Financial Health score according to InvestingPro.
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