Why is HP warning of a memory chip crunch and declining PC sales despite strong AI demand?
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| HP anticipates continued memory chip volatility and double-digit PC shipment declines, while AI adoption and premium devices provide revenue support. Image: CH |
Tech Desk – February 25, 2026:
HP is signaling caution for the year ahead as it faces persistent memory chip volatility and a potential slump in PC shipments. The company expects fiscal 2026 adjusted earnings per share to land at the lower end of its $2.90–$3.20 forecast and anticipates double-digit declines in PC shipments, mirroring broader industry trends.
The ongoing memory chip shortage, driven by massive AI data center buildouts, is raising costs for HP and rivals such as Dell. In response, HP has adjusted its supply chain and raised prices, while navigating U.S. tariffs. Interim CEO Bruce Broussard noted that these levies are not expected to immediately impact the business, and the company continues engaging with the administration on trade matters.
Despite these challenges, HP reported strength in Europe and Asia, fueled by the Windows 11 upgrade cycle and increased demand for premium commercial and consumer PCs. AI-powered devices, now over 35% of total PC shipments (up from 30% in the previous quarter), contributed to first-quarter revenue and profit exceeding analyst expectations.
Financial highlights include first-quarter revenue of $14.44 billion, up 6.9% year-over-year and above estimates of $13.94 billion. Adjusted earnings per share were 81 cents, beating expectations of 76 cents. Revenue in the personal systems segment grew 11% to $10.25 billion, while the printing segment fell 2% to $4.19 billion. Second-quarter adjusted EPS is forecasted at 70–76 cents, slightly below the consensus of 74 cents.
Analysts and investors face a mixed outlook: short-term pressures from chip shortages and tariffs contrast with growth opportunities from AI adoption and premium devices. HP’s strategic positioning around AI and high-end PCs could help offset industry softness, even as its shares fell roughly 6% in extended trading.
HP is navigating supply chain turbulence and tariff uncertainty but may maintain momentum through AI-driven and premium device demand, signaling cautious optimism for the year ahead.