Is HP Stock Worth Buying After Its Strongest Quarter in Years?

TLDR

• HP reported Q2 revenue of $14.4 billion, up 9% year-over-year, beating analyst estimates of $14.07 billion.
• Adjusted EPS came in at $0.86, well above the $0.71–$0.72 consensus, driven by strong AI PC demand.
• AI-capable machines now make up 44% of HP’s PC mix, up from 35% the prior quarter, with a target of 60–70% within the next fiscal year.
• HP trimmed the top end of its full-year adjusted EPS guidance by $0.10 to $2.90–$3.10, citing rising memory costs expected to peak in Q4.
• JPMorgan raised its price target to $26, but the stock still carries a consensus “Reduce” rating with a target of $22.17.

HP reported fiscal Q2 revenue of $14.4 billion, up 9% year-over-year, beating analyst expectations of $14.07 billion. Adjusted EPS of $0.86 also cleared the consensus estimate of $0.72 by a wide margin. The stock jumped as much as 15% in after-hours trading following the results.

HP Inc., HPQ

The Personal Systems segment led the way, posting $10.2 billion in revenue, up 13% year-over-year. Commercial PC revenue rose 14%, while consumer PC revenue climbed 10%. Despite the strong revenue numbers, total PC unit volumes fell 7%, meaning higher average selling prices — not more units sold — drove the growth.

The Printing segment held flat at $4.2 billion in revenue. Operating margin there dipped to 18.3% from 19.2% a year ago.

AI PC demand was a clear tailwind this quarter. The share of AI-capable machines in HP’s PC mix rose to 44%, up from above 35% the quarter before. HP expects that figure to reach 60–70% within the next fiscal year and top 70% by fiscal 2028.

On a GAAP basis, diluted EPS of $0.49 fell short of HP’s own prior guidance range of $0.52 to $0.58. The shortfall was largely due to $365 million in restructuring and other charges.

Memory Costs a Growing Concern

The company is navigating a crunch in memory chip supply, driven by data center demand pushing component prices higher. CFO Karen Parkhill outlined several steps HP is taking: reconfiguring products, sourcing cheaper components, and leaning into higher-margin units, alongside price adjustments tied to rising commodity costs.

HP expects memory chip scarcity to push operating margins to a low point in Q4, with improvement expected heading into fiscal 2027.

Full-Year Guidance Trimmed

HP pulled in its full-year adjusted EPS range to $2.90–$3.10, cutting the top end by $0.10. On a GAAP basis, full-year earnings guidance fell to $2.15–$2.45 per share, down from the previous range of $2.47–$2.77. HP also projects full-year free cash flow of $2.8–$3.0 billion.

For Q3, HP guided for adjusted EPS of $0.61–$0.71.

Several analysts updated their price targets after the print. JPMorgan raised its target from $22 to $26 while maintaining a neutral rating. TD Cowen also moved to $26 with a hold. Barclays went to $19 with an underweight rating, and Wells Fargo moved to $20 with an underweight.

Despite the earnings beat, the stock’s consensus rating remains “Reduce” with a consensus price target of $22.17, according to MarketBeat data. Two analysts rate it a strong buy, ten hold, and five have sell ratings.

HPQ traded at $24.92 ahead of the results, against a 12-month range of $17.56 to $29.55.

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