HP said on Tuesday that it plans to cut between 4,000 and 6,000 jobs globally by fiscal 2028. Because the company aims to streamline operations, it intends to expand its use of artificial intelligence across product development, customer support and internal processes. Shares fell 5.5% in extended trading, and the reaction showed growing concern about shifting conditions in the tech sector. Although the company is pushing ahead with AI initiatives, employees in product development, internal operations and customer support will face the greatest impact. Leadership expects the initiative to generate significant cost savings over three years.
AI Growth and Market Pressures
Earlier in the year, the company laid off an additional 1,000 to 2,000 workers as part of a restructuring effort. Since demand for AI-enabled PCs has picked up rapidly, shipments rose to more than 30% of total volume in the fourth quarter ended October 31. However, rising demand from data centers has pushed global memory chip prices higher. As a result, analysts warned that increasing component costs could pressure profits for HP, Dell and Acer. Because competition in the server market remains intense, prices for dynamic random-access memory and NAND chips have continued to rise.
Outlook and Financial Expectations
The company expects higher chip prices to affect results in the second half of fiscal 2026, even though inventory levels should support the first half. Consequently, HP is taking a cautious approach to its financial guidance while also adjusting suppliers, reducing certain memory configurations and modifying product pricing. The company projected fiscal 2026 adjusted profit per share between $2.90 and $3.20, which fell below the average analyst estimate of $3.33. Additionally, HP forecast first-quarter adjusted profit per share between 73 cents and 81 cents, with the midpoint slightly under expectations. Even so, fourth-quarter revenue reached $14.64 billion and topped estimates of $14.48 billion.
