HP’s shares posted their biggest single-day gain in months on Friday, climbing 11.4% to €23.57, after the company delivered quarterly results that surpassed revenue expectations and underscored the accelerating adoption of artificial-intelligence-powered computers. The advance came even as management flagged rising component costs that threaten to squeeze profitability in the second half of the fiscal year.
Revenue jumped 9% to $14.41 billion in the second quarter of fiscal 2026, driven primarily by the Personal Systems segment, where sales rose 13% to $10.2 billion. Commercial PC demand was notably strong, with a 14% increase, fuelled by the transition to Windows 11 and growing corporate appetite for AI-capable hardware. The printing business, by contrast, held steady at $4.2 billion.
A standout metric was the share of AI PCs in total shipments, which reached 44% during the quarter. HP has set an ambitious target of lifting that proportion to between 60% and 70% in the next fiscal year, with a longer-term goal of exceeding 70% by fiscal 2028.
On a GAAP basis, the company earned $0.49 per share, weighed down by $365 million in restructuring charges. Adjusted earnings came in at $0.86 per share, above consensus estimates. The adjusted operating margin stood at 7.5%, while GAAP margin slipped to 4.2%, down 0.7 percentage points year-over-year. Net margin edged lower to 4.4%.
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Operating profit in the PC division improved 30% from a year ago, lifting its margin to 5.2%. The printing unit held its margin steady at 18.3%, despite tepid demand. Free cash flow totalled $0.8 billion, on operating cash flow of $0.9 billion. HP returned $374 million to shareholders through dividends and buybacks during the quarter, and ended the period with $3.7 billion in liquidity.
The margin pressure stems from rising prices for memory and other components. HP has responded by qualifying cheaper parts, building inventory early, and adjusting prices regionally. Still, management expects the cost headwinds to intensify, particularly in the fourth quarter. For the third quarter, it guided adjusted earnings per share in a range of $0.61 to $0.71. Full-year adjusted EPS is forecast at $2.90 to $3.10, with free cash flow of $2.8 billion to $3.0 billion.
Analysts have reacted with cautious optimism, raising price targets while maintaining neutral ratings. The central question, observers say, is whether HP can sustain robust AI-PC growth long enough to offset the looming impact of higher component costs on margins.
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