In a major restructuring move, HP Inc. has revealed plans to cut between 4,000 and 6,000 jobs globally by fiscal year 2028, marking one of its most significant workforce reductions in recent years. The decision is part of a broader strategy to modernize its operations, enhance efficiency, and integrate artificial intelligence (AI) across every layer of the company.
The announcement underscores the shifting landscape of the global tech industry, where companies are increasingly turning to automation and AI-driven workflows to stay competitive amid tightening margins, volatile demand, and rapid technological change.
HP shared the details during its latest earnings update on Tuesday, outlining how the job cuts align with a multiyear transformation plan designed to streamline product development, improve customer service, and boost overall productivity.
Restructuring Strategy: AI at the Core of HP’s Next Chapter
According to HP CEO Enrique Lores, the company’s reorganization is deeply tied to the rapid adoption of AI, both internally and in the devices it brings to market.
“AI will be fundamental in accelerating our innovation cycle, improving customer satisfaction, and driving operational efficiency,” Lores said during a media briefing call.
The upcoming job cuts will affect teams working in:
- Product development
- Internal operations
- Customer support
These areas are expected to undergo significant restructuring as AI tools and automation take over functions that were traditionally handled manually.
HP projects that the plan will lead to $1 billion in gross run-rate savings over the next three years. This serves as a critical part of the company’s long-term restructuring blueprint, enabling it to reinvest in AI-driven product engineering and next-generation personal computing.
A Continuing Trend of Workforce Reduction
HP’s latest announcement follows earlier layoffs this year. In February, the company let go of 1,000–2,000 employees as part of a pre-existing restructuring programme.
The broader tech industry has been witnessing similar workforce changes, not just due to cost cuts but also because of a fundamental shift in business strategy. With companies like Microsoft, Meta, Google, and Amazon doubling down on AI, the skills required inside these firms are changing rapidly.
HP appears to be following the same trajectory: shrinking legacy operations while expanding AI capabilities.
PC Market Realities: Demand Rises as AI-Enabled Devices Gain Momentum
One positive sign for HP is the growing demand for AI-enabled PCs, a new category of devices optimized for on-device AI models, faster processing, and enhanced productivity.
In the quarter ending October 31, AI PCs accounted for more than 30% of HP’s global shipments — a meaningful jump driven by corporate refresh cycles and consumer interest in next-generation computing.
HP believes this trend will continue, stating that AI-enabled devices will eventually become the standard across both personal and enterprise markets. This is one of the reasons why the company is investing heavily in AI-led innovation, even as it trims other areas of its workforce.
Stock Market Reaction: Shares Fall 5.5% After Announcement
Despite the strong narrative around AI-driven transformation, HP’s stock took a hit following the restructuring announcement. Shares fell 5.5% in extended trading, reflecting investor concerns over:
- Slower profit forecasts
- Rising component costs
- Potential delays in AI PC adoption
- The impact of global memory chip price spikes
The market appears cautious, waiting to see how HP balances cost-cutting with future growth investments.
Memory Chip Price Surge Poses New Challenge
A looming challenge for HP — and the wider hardware sector — is the rapid rise in global memory chip prices. Major financial analysts, including those from Morgan Stanley, warn that:
- Prices of DRAM (Dynamic Random Access Memory)
- Prices of NAND flash memory
are expected to surge due to overwhelming demand from data centers, cloud services, and server manufacturers building AI infrastructure.
As Big Tech accelerates its AI ambitions, companies such as HP, Dell, Acer, and Lenovo may struggle to maintain profit margins unless they renegotiate supply chains or adjust pricing.
Enrique Lores noted that HP expects to feel the real impact of these price increases starting in the second half of fiscal 2026.
The company does have enough inventory for the first half of the fiscal year, but it is actively taking steps to manage future risks.
HP’s Strategy to Combat Rising Component Prices
To navigate the anticipated cost pressures, HP is pursuing a multi-pronged approach:
1. Qualifying Lower-Cost Suppliers
HP is exploring alternative supply-chain partners who can offer memory components at more competitive pricing.
2. Reducing Memory Configurations
The company may offer product variants with lower memory specifications to maintain affordability.
3. Implementing Price Adjustments
HP has signaled it may increase consumer prices to offset rising component costs — an increasingly common trend in the industry.
Lores highlighted that the company is “taking a prudent approach” to its revenue guidance for the second half of fiscal 2026, preparing for multiple scenarios in case the chip market tightens further.
Financial Forecast: Profit Guidance Falls Short of Expectations
Alongside news of reshuffling and job reductions, HP provided its earnings outlook, which came in weaker than analysts had projected.
Fiscal 2026 Forecast
- Expected Adjusted EPS: $2.90 to $3.20
- Analyst Estimate (LSEG): $3.33
Upcoming Quarter Forecast
- Expected Q1 Adjusted EPS: $0.73 to $0.81
- Average Analyst Estimate: $0.79
The midpoint of the company’s guidance falls slightly below market expectations, contributing to investor skepticism and the drop in HP’s share price.
Fourth Quarter Results: Slight Outperformance Amid Uncertainty
Despite challenges, HP’s Q4 revenue for the period ending October 31 reached:
- $14.64 billion, beating expectations of $14.48 billion
The company attributes this to stronger-than-anticipated performance in:
- Enterprise hardware sales
- AI PC shipments
- Printing business stabilization
However, even with better-than-expected revenue, profit margins remain pressured by:
- Component cost fluctuations
- High competition in personal computing
- Declining traditional PC sales
Restructuring in the Era of Artificial Intelligence
HP’s transformation plan mirrors a growing trend: traditional hardware companies are pivoting toward AI-focused ecosystems. The next generation of personal computers is expected to rely heavily on:
- Onboard AI chips
- Localized machine learning capabilities
- Real-time processing
- Personalized automation
This technological shift demands new skill sets — one reason behind HP’s workforce restructuring.
AI is reshaping:
- Customer service (via automated AI agents)
- Manufacturing (through predictive analytics and robotics)
- Product design (through generative AI and digital twins)
- Support operations (via automated troubleshooting systems)
As these tools scale, fewer employees are required for manual processes, though more may be hired in AI engineering and software roles.
Industry-Wide Context: HP Is Not Alone
The job cuts at HP follow broader patterns in the global tech and electronics industry:
- Dell has reduced staffing levels as PC demand recovers slowly
- Intel is restructuring operations and investing heavily in AI chips
- Cisco, Amazon, Google, and Microsoft have conducted large layoffs tied to shifts in business focus
- Apple is heavily expanding its AI capabilities in upcoming product lines
The acceleration of AI adoption is expected to continue reshaping employment patterns across tech firms through the end of the decade.
What It Means for HP’s Future
Despite near-term challenges, HP appears to be positioning itself for a long-term pivot toward AI-first computing. The job cuts represent a difficult but strategic shift as the company attempts to:
- Reduce operational costs
- Improve efficiency
- Invest more aggressively in AI
- Adapt to global economic pressures
- Navigate unpredictable component markets
If executed well, HP’s restructuring could strengthen its ability to compete in a world increasingly dominated by AI-powered devices and cloud ecosystems.
However, the next two years remain critical as the company manages:
- Rising memory chip prices
- Market uncertainty
- Evolving customer expectations
- Profit margin pressures
