HP to Eliminate 6,000 Jobs by 2028, Accelerates AI Development
HP Inc. recently announced significant job cuts as part of a strategic initiative to streamline operations and enhance artificial intelligence (AI) capabilities. The company plans to eliminate between 4,000 and 6,000 positions globally by fiscal year 2028. CEO Enrique Lores shared these details during a briefing, emphasizing that this move aims to improve product development and customer satisfaction.
Job Cuts and Savings Targets
According to Lores, HP anticipates achieving about $1 billion in gross run rate savings over the next three years due to these layoffs. The restructuring will particularly affect teams involved in product development, internal operations, and customer support. Earlier this year, HP also reduced its workforce by an additional 1,000 to 2,000 employees as part of a previously declared restructuring plan.
Impact of AI on Product Development
The integration of AI into HP’s product lines continues to gain traction, with AI-enabled PCs now accounting for over 30% of shipments in the fourth quarter ending October 31. This growth reflects a broader trend across the technology sector, where demand for AI tools is rapidly increasing.
Challenges in the Market
Despite the positive outlook for AI growth, HP faces challenges related to rising costs in memory chips. Analysts from Morgan Stanley have warned that a surge in global memory chip prices, driven by increased demand from data centers, could negatively impact profit margins for consumer electronics manufacturers, including HP, Dell, and Acer.
Financial Projections
HP projects that the financial impact of these cost increases will become apparent in the latter half of fiscal 2026. While the company has sufficient inventory for the first half, Lores noted a cautious approach to projecting financial guidance for the second half of the fiscal year. Efforts are underway to mitigate impacts through various strategies, including qualifying lower-cost suppliers and adjusting memory configurations.
Quarterly Financial Expectations
- Fiscal 2026 adjusted profit per share is estimated to be between $2.90 and $3.20.
- This projection falls short of analysts’ average estimate of $3.33.
- For the first quarter, adjusted profit per share is expected to range from 73 to 81 cents.
Revenue figures from the recent fourth quarter were reported at $14.64 billion, exceeding expectations of $14.48 billion, showcasing HP’s ability to generate revenue amid changing market dynamics.
