HP has announced plans to cut between 4,000 and 6,000 jobs globally by fiscal 2028, part of a multi-year restructuring effort aimed at simplifying operations and scaling its AI-driven product strategy. The move signals one of the company’s most significant workforce adjustments in years, pacing alongside a broader industry shift to integrate AI deeper into product development, customer support, and internal processes.
A Restructuring Plan Tied to AI Ambitions
HP says the cuts will help create $1 billion in gross run-rate savings over three years, allowing the company to reallocate capital toward AI investments and initiatives designed to improve operational efficiency. The reductions will largely impact teams in product development, internal operations, and customer support, according to CEO Enrique Lores.
The company has already laid off 1,000–2,000 employees earlier this year under a previously announced restructuring plan. The larger headcount reduction now extends this strategy through 2028.
HP executives say the transition is necessary as the company pushes AI-enabled PCs, automation tools, and next-generation device ecosystems to become central drivers of future growth.
AI-Enabled PCs Are Growing, but Market Pressures Remain
Demand for AI-enabled PCs — notebooks with neural processors and on-device AI features — has climbed sharply. HP said that over 30 percent of its Q4 shipments were AI PCs, reflecting rising enterprise and consumer interest.
However, HP now faces a new cost headwind. A global spike in memory chip prices, driven by data center demand and intense competition among server manufacturers, is expected to squeeze margins for PC makers like HP, Dell, and Acer.
The company expects the pricing impact to be felt more strongly in the second half of fiscal 2026, though it has enough inventory to offset the effect in the near term.
To manage these pressures, HP is qualifying lower-cost suppliers, reducing certain memory configurations, and implementing targeted price adjustments.
Revenue Beats Estimates, but Outlook Stays Cautious
For Q4, HP reported revenues of $14.64 billion, slightly ahead of analyst expectations. Still, the company issued a conservative guidance for FY2026:
FY26 adjusted EPS: $2.90 to $3.20
Analyst consensus: $3.33
Q1 adjusted EPS: 73 to 81 cents (midpoint below expectations)
The muted forecast reflects supply-chain uncertainty, rising component costs, and the long-cycle nature of HP’s restructuring and AI initiatives.
A Tightrope Between Cost Optimisation and AI Reinvention
HP’s transformation strategy centres on shifting resources into AI-driven hardware, streamlining its portfolio, and strengthening product differentiation with embedded intelligence. While job cuts may deliver cost savings, the company acknowledges that meeting future demand for AI-first devices will require sustained R&D investment.
The transition marks a balancing act: reducing operational overhead while simultaneously modernising the business around AI-centric value creation.
(This news was first covered by Reuters.)
