HP PC Shipments Fall, Shares Drop 9%

According to HP, the company’s personal systems business experienced a decline in shipments and profit margins during the third quarter, as higher memory chip costs continued to pressure profitability. Although HP implemented price increases to offset rising component expenses, the adjustments were not enough to fully offset cost inflation, sending the company’s shares down 9% in after-hours trading following the earnings announcement.

HP reported third-quarter revenue growth of 12.5%, but weaker performance in its PC business overshadowed the positive top-line results. The company expects rising commodity prices and the fading benefits of lower-cost inventory to further weigh on personal systems margins in the fourth quarter, with a full recovery potentially not arriving until fiscal 2027.

During the earnings call, HP Chief Financial Officer Karen Parkhill said the company expects fourth-quarter revenue growth to be below seasonal levels due to continued price increases driven by higher commodity costs.

However, Parkhill added that HP still expects year-over-year revenue growth in the fourth quarter, supported by higher product prices, stronger market share in premium product categories, increased sales of higher-margin products, and growing adoption of AI PCs as artificial intelligence workloads increasingly move toward edge devices.

Similar to Dell Technologies, Apple, and Lenovo, HP is facing challenges from a global memory chip supply shortage. The rapid expansion of AI data centers has absorbed significant semiconductor capacity, intensifying supply-demand pressure across the memory market.

In the third quarter, HP’s personal systems revenue increased 18%, while PC shipments declined 16%. The company has shifted its focus toward higher-priced and higher-margin products, including AI-enabled PCs. Meanwhile, its printing business revenue fell 2% to $3.9 billion.

Operating margin for HP’s personal systems business dropped from 5.2% in the previous quarter to 4.6%, as increases in commodity and memory costs outpaced the benefits of price adjustments.

HP reported third-quarter revenue of $15.7 billion, exceeding analysts’ expectations of $14.38 billion, mainly driven by strong demand for PCs optimized for artificial intelligence applications.

The company also raised its full-year adjusted earnings per share outlook from its previous forecast of $2.90 to $3.10 to a new range of $3.19 to $3.29. The updated forecast includes an estimated positive impact of $0.19 per share from expected tariff refunds.