HP Inc. outlined an aggressive restructuring plan on Tuesday that makes clear the Palo Alto-based giant intends to fund its transformation towards artificial intelligence at the expense of traditional human resources. The company announced its intention to cut between 4,000 and 6,000 jobs by fiscal 2028, a decision that is expected to generate $1 billion in gross savings over three years and will primarily hit product development and customer service teams.
CEO Enrique Lores argues that the cuts are necessary to streamline operations and fully implement AI to accelerate innovation. This strategy appears to be bearing its first product fruit – AI-enabled PCs already accounted for more than 30 per cent of HP’s shipments in the fourth quarter, and the company’s total revenue (US$14.64 billion) exceeded analysts’ expectations.
Despite sales success, HP’s financial outlook remains pressured by macroeconomic factors. Morgan Stanley analysts warn that Big Tech’s AI infrastructure arms race has inflated RAM and NAND prices. Rising demand from data centres is draining the component market, hitting consumer electronics manufacturers. Lores acknowledged that HP expects to feel these increases in the second half of fiscal 2026, which will force aggressive actions such as renegotiating with vendors or changing hardware configurations.
Investors reacted nervously to the news, repricing the company’s shares by 5.5% in after-hours trading. The cool reception is mainly due to cautious earnings forecasts. Projected adjusted earnings per share in 2026 ($2.90-$3.20) and first-quarter guidance came in below market consensus, suggesting that the road to fully monetising the AI era will be bumpy and expensive for HP.
