HP Raises Outlook as Premium AI PCs and Tariff Refunds Boost Results

Key Points

• HP raised its annual outlook after record Personal Systems revenue, premium product mix, pricing actions and tariff refunds boosted third-quarter results. The company expects an additional tariff-refund benefit in the fourth quarter, but its guidance increase excludes that benefit.
• Demand is shifting toward premium AI PCs, workstations and hybrid AI solutions that run workloads locally and in the cloud. HP expects Personal Systems margins to dip in the fourth quarter before gradually returning to its long-term 5%–7% range in fiscal 2027.
• HP is expanding growth initiatives in Print, including Big Tank, industrial and 3D printing, while Big Tank gained four points of market share. Print margins are expected at the low end of the 16%–19% target range due to unit placements and higher input costs.

HP NYSE: HPQ Chief Financial Officer Karen Parkhill said the company’s third-quarter performance was supported by record revenue in its Personal Systems segment, premium product mix and pricing actions, while Print results met expectations. Speaking at the Goldman Sachs Communacopia + Technology Conference, Parkhill said the company raised its annual guidance even excluding the benefit of tariff refunds.

Parkhill said HP continued to execute its four-pillar plan for managing higher commodity costs, which includes securing supply, shaping demand, reducing costs and implementing pricing actions. The company also benefited from refunds of IEEPA tariffs during the third quarter and expects additional refunds in the fourth quarter.

Premium PCs and Hybrid AI Demand

HP is focusing its Personal Systems strategy on premium commercial PCs, AI PCs, workstations, peripherals and service offerings, including its Workforce Experience Platform, or WXP. Parkhill said the strategy is intended to expand market share, drive revenue growth and improve the company’s sales mix and margins.

The company is seeing growth across regions and regained market leadership in the Americas and North America during the latest quarter, Parkhill said.

While early demand for AI PCs was driven in part by customers seeking to future-proof their technology fleets, Parkhill said enterprise customers are increasingly seeking solutions that allow artificial intelligence workloads to run locally as well as in the cloud.

“Tokenomics is one compelling reason” for the shift, Parkhill said, citing rising token costs. Customers also want faster, more secure and more privacy-focused AI capabilities, she said. HP refers to the approach as hybrid AI, combining cloud-based and locally run AI.

Parkhill said WXP provides telemetry and operational data that can help chief information officers manage PCs, workstations, printers and collaboration devices. The platform can identify potential issues before they affect employees and help customers configure devices with the appropriate amount of memory, an increasingly important consideration amid rising component costs.

Margins, Pricing and Supply

Parkhill said increases in Personal Systems average selling prices have been driven by both pricing and product mix. Lower-end PC demand has declined, while demand has shifted toward premium AI PCs, workstations and related peripherals, she said.

HP expects Personal Systems margins to be lower in the fiscal fourth quarter than in the third quarter, before improving sequentially and returning to its long-term 5% to 7% range at some point in fiscal 2027. Parkhill said some margin-improvement actions require time, including repricing long-term enterprise customer agreements and redesigning products to use less memory.

About 70% of HP’s business was commercial in the latest quarter, Parkhill said, offering a rough indication of the portion of the portfolio that may include enterprise customer relationships with longer-term agreements.

The CFO said HP has secured the supply needed to meet customer demand during the current fiscal year and is working on supply for the following year. The company has relied on long-standing supplier relationships and has qualified new suppliers at what Parkhill described as record speed, including some suppliers in China. Those Chinese suppliers currently represent a smaller part of HP’s overall supply base and serve China and certain other countries.

HP expects memory costs to continue rising next fiscal year, though at a less steep pace than during the current year. Parkhill said lower-end PC demand appears to have been delayed rather than permanently lost and could return as prices and costs stabilize.

Print Growth Areas and Tariff Refunds

In Print, HP is investing in Big Tank printers, industrial printing, 3D printing and subscription offerings such as HP All-In Plan. Parkhill said approximately 17 million printers were sold worldwide in the latest quarter, with Big Tank models accounting for about one-third of that volume.

HP’s overall worldwide print market share is in the low- to mid-30% range, compared with low- to mid-20% share in Big Tank, Parkhill said. The company gained four points of Big Tank share during the quarter.

Parkhill said AI features in HP’s printing products are intended to improve customer experience and can be monetized, though they do not necessarily expand the overall print market. Examples include the company’s Precise Print feature, which is being expanded from the U.S. to 130 countries, automated redaction of sensitive information and document-scan summaries using Copilot.

Industrial Printing delivered its 12th consecutive quarter of growth, according to Parkhill. She cited a shift from analog to digital printing for labels and packaging, as well as HP Neo software that supports AI-enabled workflow management for industrial print customers.

HP expects Print operating margins in the fiscal fourth quarter to be at the low end of its 16% to 19% target range, reflecting unit placements and input-cost pressures. Memory and storage costs affect Print less than PCs, Parkhill said, while resin and plastics costs have also increased.

In the third quarter, IEEPA tariff refunds contributed about $0.11 to earnings and approximately 80 basis points to both gross and operating margin, Parkhill said. HP expects roughly $0.08 of additional benefit in the fourth quarter, with most of the third-quarter benefit and all expected fourth-quarter benefit going to Print. The company may receive some additional refunds through the first quarter, she said.

Parkhill also said HP’s CEO search is progressing and remains within a typical six- to 12-month timeline. She said HP plans to provide its fiscal 2027 outlook during its fourth-quarter earnings call regardless of whether a permanent CEO has been appointed by then.

About HP (NYSE:HPQ)

HP Inc is a global technology company that develops and sells personal computing and printing products and related services. Its Personal Systems business offers laptops, desktop computers, workstations, gaming PCs, monitors, peripherals and accessories for consumers, businesses and public-sector organizations.

Through its Printing business, HP provides home and office printers, commercial printing systems, supplies such as ink and toner, and managed print services. The company also offers software and solutions designed to support device management, security, productivity and digital workflows.

HP serves customers in markets around the world through direct sales, online channels, retailers, distributors and business partners.

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