HP Inc. announced a significant global workforce reduction, planning to cut between 4,000 and 6,000 jobs through fiscal 2028. This strategic move is part of a broader initiative to streamline operations and accelerate the integration of artificial intelligence (AI) across its workflows. The company aims to leverage AI to enhance product development, improve customer satisfaction, and boost overall productivity. CEO Enrique Lores indicated that teams focused on product development, internal operations, and customer support would be particularly affected by these layoffs. This initiative is projected to generate $1 billion in gross run rate savings over three years.

This latest round of job cuts follows an earlier restructuring plan in February, which saw HP lay off between 1,000 and 2,000 employees. The company's focus on AI is also reflected in evolving customer preferences. There is a growing interest in personal computers equipped with specialized AI chips, with such devices accounting for over 30% of HP's shipments in the fourth quarter, which ended on October 31.

However, the shift towards AI-enabled PCs also introduces new financial challenges. Morgan Stanley analysts have warned that a global surge in memory chip prices, driven by high demand from data centers and Big Tech's push to build AI infrastructure, could increase expenses and pressure profit margins for consumer electronics manufacturers, including HP, Dell, and Acer. This surge specifically impacts dynamic random access memory (DRAM) and NAND chips.

HP's CEO, Enrique Lores, stated that the company anticipates feeling the impact of these higher memory chip prices in the second half of fiscal 2026, although it currently possesses sufficient inventory to cover the first half. In response, HP is adopting a prudent approach, implementing aggressive actions such as qualifying lower-cost suppliers, reducing memory configurations in its products, and taking price adjustments to mitigate the financial impact.

In addition to these measures, HP has been actively working to reduce expenses and has strategically moved the production of most of its North America-bound products outside of China. This relocation strategy aims to offset the effects of sweeping tariffs previously imposed by the Trump administration.

Financially, HP's shares declined approximately 4% in extended trading after closing at $24.32. The stock had already dropped 25% year-to-date before these results were released. The company projects an adjusted profit per share for fiscal 2026 between $2.90 and $3.20, which falls below analysts' average estimate of $3.33. Despite this, HP reported fourth-quarter revenue of $14.64 billion, surpassing analysts' estimates of $14.48 billion. The company's PC unit saw an 8% increase in revenue, largely attributed to customers upgrading to machines with Windows 11 and the continued strong demand for personal computers featuring special AI chips.