In an impressive display of market adaptability, HP has surpassed revenue and profit expectations in Q2 2026, demonstrating robust growth favored by surging demand for AI PCs. While revenue was reported at $14.4 billion, achieving a remarkable 9% year-over-year increase, non-GAAP earnings per share (EPS) reached $0.86, far exceeding analysts’ predictions of $0.71.
The driving force behind this rise is the escalating demand for AI-optimized PCs and a refreshing wave of Windows 11 upgrades. This quarter not only marked HP’s eighth consecutive period of top-line growth but also reinforced its status in the market with a 15% surge in after-hours stock trading.
However, the positive outlook faces potential headwinds from increasing commodity costs and memory prices, alongside an ongoing leadership transition. Yet, the company’s strategy to capitalize on AI computing at the edge offers promising prospects. AI PCs have become central, now comprising 44% of HP’s total PC shipments, a significant increase from the previous quarter’s 35%. The forecast is optimistic, aiming for 60-70% by fiscal 2027.
Interim CEO Bruce Broussard highlighted the shift towards AI on the edge, as companies look to avoid rising cloud costs and latency issues, and to address data privacy concerns. He underscored that “Companies like HP that own the trusted edge, the workflow context, and the orchestration layer between local and cloud intelligence will be positioned to thrive.”
HP is leveraging its position by transforming PCs into genuine AI execution platforms, focusing on local inference capabilities in new products like the Z Workstations. They are also aligning with over 150 software partners to optimize productivity and development around their AI capabilities.
Despite historical challenges, the Windows 11 refresh is progressing, catalyzing substantial upgrades, particularly in EMEA and APJ markets where currency-based revenue grows. Ketan Patel, Personal Systems President, remarked on the inherent strength in both commercial and consumer markets, bolstered by AI and Windows 11 saturation.
While HP enjoys a prosperous run, a looming challenge lies in the rising costs of memory and storage. CFO Karen Parkhill anticipates the burden of these costs peaking in Q4, but expressed confidence in long-term agreements and strategic repricing to mitigate impacts.
The print division showcased stability with $4.2 billion in revenue, identifying growth in consumer subscriptions and 3D printing. Despite market challenges, initiatives like the Tank printers are helping gain consumer traction.
Looking forward, HP raised its full-year non-GAAP EPS guidance while the business remains focused on securing a permanent CEO. The search prioritizes candidates capable of delivering long-term value amid changing landscapes.
HP’s recent results and strategic initiatives underscore their commitment to leading in edge computing and AI PCs. These efforts bolster their competitive advantage and address the pressing challenges posed by memory costs and leadership planning.
