HP Inc ‘s latest financial results may stand as a metaphor for the current state of the hardware industry: technological progress is rushing forward, but hard macroeconomic realities are effectively dampening investor sentiment. Although the company beat analysts’ expectations for its fiscal first quarter, forecasts for the rest of 2026 forced the market to revise its optimism, resulting in a 6 per cent share discount in after-hours trading.
The main challenge for the Palo Alto-based giant remains, paradoxically, that which drives Silicon Valley as a whole – artificial intelligence. The massive build-out of AI data centres is eating up memory resources, creating acute shortages and a volatility in chip prices that HP expects to last at least until next year. As a result, chief financial officer Karen Parkhill announced that annual earnings per share are likely to sit at the lower end of the forecast range of $2.90-$3.20.
Despite this turbulence, HP is effectively monetising the transformation towards ‘AI PCs’. Devices equipped with dedicated processors for artificial intelligence tasks already accounted for more than 35% of the company’s total shipments in the last quarter. The strategy of shifting the portfolio towards premium and commercial devices is yielding tangible results in the form of higher average selling prices. Additional fuel for growth, particularly in Europe and Asia, is the ongoing PC fleet replacement cycle forced by the migration to Windows 11.
However, there is a new variable on the business horizon: trade policy in Washington. The Donald Trump administration’s introduction of a 10 per cent import tariff, with the prospect of raising it to 15 per cent, introduces an element of uncertainty in supply chains. The interim CEO, Bruce Broussard, is trying to reassure the market by pledging active discussions with the administration and stressing that the immediate impact of the tariffs on company operations is under control. Nevertheless, the need to raise prices to compensate for customs costs could put customer loyalty in the budget segment to the test.
