HP Announces Job Cuts as Part of AI-Driven Restructuring Plan

HP Inc. has announced plans to reduce its global workforce by 4,000 to 6,000 employees by fiscal year 2028 as part of an ongoing effort to streamline operations and integrate artificial intelligence (AI) into its product development processes. The restructuring is designed to enhance productivity, improve customer satisfaction, and accelerate the company’s innovation pipeline.

CEO Enrique Lores discussed the changes during a media briefing, highlighting that the job cuts will primarily affect teams involved in product development, internal operations, and customer support. This move is seen as part of HP’s broader strategy to adopt AI technologies that will drive greater efficiency and competitiveness in an increasingly digital landscape.

“We expect this initiative will create $1 billion in gross run rate savings over three years,” Lores said, outlining the potential financial benefits of the plan.

This announcement comes after a series of earlier restructuring moves, including layoffs of 1,000 to 2,000 employees in February, which were part of an ongoing effort to reshape the company’s operational model.

The Push for AI and Automation

HP’s renewed focus on AI comes at a time when the tech industry is increasingly leaning into automation and machine learning to stay competitive. The company is aiming to expedite product development and better meet the growing demand for AI-powered computing solutions.

“Demand for AI-enabled PCs continues to ramp up,” Lores said. “In the fourth quarter ending October 31, AI-based PCs made up over 30% of our total shipments.”

This strategic pivot toward AI-enabled devices aligns with broader industry trends, as businesses and consumers alike look for smarter, faster computing solutions. HP hopes to capitalize on this growing market by leveraging AI to optimize design and manufacturing processes, ultimately delivering more efficient products to customers.

Financial Outlook and Rising Costs

Despite the optimism surrounding AI, HP is also grappling with external challenges that could pressure its profitability. The global surge in memory chip prices, spurred by heightened demand from data centers, is expected to drive up costs in the consumer electronics sector. Analysts from Morgan Stanley have warned that companies like HP, Dell, and Acer may face increased production expenses as a result.

“Big Tech’s push to build out AI infrastructure has triggered price increases for dynamic random access memory (DRAM) and NAND chips,” Lores noted. These components are essential for data storage and processing in many consumer electronics, making them a critical cost factor for HP.

Lores indicated that HP would begin to feel the impact of these rising prices in the second half of fiscal 2026. However, the company is taking a proactive approach to manage these cost pressures. “We are qualifying lower-cost suppliers, reducing memory configurations, and implementing price actions to offset some of these increases,” Lores explained.

Lowered Earnings Forecasts for 2026

HP also provided a cautious earnings outlook for the near future. The company now expects adjusted profit per share for fiscal 2026 to fall between $2.90 and $3.20, below analysts’ consensus estimate of $3.33. This lower-than-expected guidance reflects the anticipated impact of rising component costs and the continued transition to AI-driven business operations.

For the upcoming first quarter, HP forecasts adjusted profit per share to be between 73 and 81 cents, with the midpoint coming in below analysts’ expectations of 79 cents.

Despite these challenges, HP’s fourth-quarter revenue was a bright spot. The company reported revenue of $14.64 billion, exceeding Wall Street estimates of $14.48 billion, driven by strong performance in its printing and personal systems segments.

Looking Ahead

As HP navigates these major changes, the company is positioning itself for a future where AI plays an increasingly integral role in its operations. While the road ahead may present challenges, particularly in terms of rising component costs, the company is optimistic that its efforts to streamline operations and adopt cutting-edge technologies will pay off in the long run.

HP’s ongoing restructuring efforts, combined with its investments in AI and automation, signal the company’s commitment to remaining at the forefront of the technology industry. However, as the company reduces its workforce in pursuit of greater efficiencies, it will be crucial for HP to maintain a delicate balance between innovation and the well-being of its employees.