HP Inc. (HPQ) Stock Drops After Beating Earnings — Here’s Why

TLDR

• HP posted Q2 adjusted EPS of $0.86, beating the $0.71 Wall Street estimate by 21%
• Revenue came in at $14.4 billion, up 9% year over year, topping the $14 billion forecast
• Personal Systems revenue hit $10.2 billion, up 13% year over year
• HPQ stock initially jumped on the results but turned negative in premarket trading
• HP narrowed its full-year EPS guidance to $2.90–$3.10, tightening from an earlier range of $2.90–$3.20

HP beat on both the top and bottom lines in its fiscal second quarter, but the stock couldn’t hold onto its initial gains. HPQ was pointing 1.5% lower in premarket trading Thursday despite the strong numbers.

HP Inc., HPQ

The company reported adjusted EPS of $0.86 for the quarter ended April 30, well above the $0.71 Wall Street had expected. Revenue of $14.4 billion also cleared analyst estimates of $14 billion.

That’s a 9% revenue jump from the same period last year. Not bad for a company navigating one of the trickier cost environments in recent memory.

Personal Systems Leads the Way

Personal Systems was the standout segment, pulling in $10.2 billion in revenue — up 13% year over year and ahead of the $10 billion analysts had penciled in. Commercial PS revenue rose 14%, while Consumer PS was up 10%.

Unit volumes, however, told a different story. Total PC units were down 7%, with both Consumer and Commercial units each falling around 7–8%. Higher revenue on fewer units points to pricing power doing some heavy lifting.

Printing revenue came in at $4.2 billion, roughly flat year over year and slightly above the $4.1 billion estimate. Consumer Printing revenue fell 10%, while Commercial Printing was flat. Supplies revenue edged up 1%.

Memory Costs Remain a Pressure Point

Rising memory costs have been a persistent headache for HP and the broader tech hardware space. Memory demand tied to AI infrastructure buildout has far outpaced supply, pushing costs higher and squeezing margins across the industry.

HP has been working to offset this by raising prices. The strategy appears to be working, at least on the revenue line.

Operating margins reflected the ongoing pressure, with Personal Systems clocking in at 5.2% and Printing at 18.3%.

Free cash flow for the quarter was $0.8 billion, with operating cash flow of $0.9 billion. HP returned $374 million to investors through dividends and buybacks, including $274 million in dividends at $0.30 per share.

The company exited the quarter with $3.7 billion in gross cash.

Interim CEO Bruce Broussard pointed to progress across AI PCs, Z workstations, and AI-powered print as evidence the company is building toward longer-term growth.

CFO Karen Parkhill said the company is “executing with discipline in a dynamic environment” and used the strong two-quarter run to tighten its annual outlook.

For Q3, HP guided for non-GAAP EPS of $0.61–$0.71. For the full fiscal year 2026, it updated its non-GAAP EPS estimate to $2.90–$3.10, narrowing from the prior range of $2.90–$3.20. It also reiterated free cash flow guidance of $2.8–$3.0 billion for the year.

Back in February, HP had flagged it expected results to land “closer to the low end” of its range. The updated guidance reflects a more confident tone.

GAAP EPS for Q2 came in at $0.49, up from $0.42 a year ago but below the company’s own guided range of $0.52–$0.58.

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