HP tops revenue, profit estimates as AI PC and Windows 11 refresh boost demand

By Jaspreet Singh

May 27 (Reuters) – HP beat analysts’ estimates for second-quarter revenue and profit on Wednesday, helped by strong demand for AI-optimized personal computers, but warned that rising memory costs would pressure margins.

PC makers including HP, Dell Technologies and China’s Lenovo Group are navigating a shortage of memory chips as data center buildout is sucking up capacity and triggering price increases of smartphones and PCs.

That supply crunch is pushing some enterprises toward higher-margin premium PC categories during the Windows 11 upgrade cycle after Microsoft ended support for Windows 10 in October last year.

CFO Karen Parkhill said HP “took deliberate actions to lower memory costs” by reconfiguring products, sourcing cheaper components and prioritizing higher-margin units, while also adjusting prices to account for commodity increases.

Still, HP expects the scarcity of memory chips to result in operating margins reaching a low point in the fourth quarter, with sequential improvement anticipated into fiscal 2027.

HP’s second-quarter revenue rose 9% to $14.41 billion from a year ago, beating LSEG-compiled analysts’ average estimate of $14.07 billion. Its adjusted earnings per share of 86 cents also topped estimates of 71 cents for the quarter ended April 30.

    Shares of the company rose as much as 15% in extended trading following the results. They were last down around 1%.

The company said AI PC shipments are rapidly increasing, now marking up 44% of its total PC shipments in the second quarter, a significant rise from over 35% in the previous quarter.

HP projects that AI PC shipments will constitute an even larger share of its total shipments, expecting them to reach between 60% and 70% in the next fiscal year and exceed 70% by fiscal year 2028.

While the PC unit market is expected to decline in the “high teens” in the second half of the year, HP plans to drive personal systems revenue through pricing changes, share gains in premium categories and offering higher-margin products.

HP now expects fiscal 2026 adjusted EPS of $2.90 to $3.10, compared with its prior estimates of $2.90 to $3.20.

The company expects third-quarter adjusted EPS between 61 cents and 71 cents, the mid-point of which was slightly above estimates of 64 cents.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Shreya Biswas)