HP has reported that a resurgence in business upgrades to personal computers contributed significantly to the company meeting its fiscal targets for the April quarter. During an interview with Barron’s, CEO Enrique Lores remarked, “Enterprises are starting a new cycle. We see that in a funnel of opportunities for the second half that’s much stronger than we saw before.”
The company has launched several AI-focused products this year, including workstations tailored for data scientists. However, substantial sales from AI-enabled PCs are anticipated to commence next year. Lores commented on the immediate impact, stating, “The impact of AI in this quarter is going to be limited. In our estimate of total PC shipments in the second half, about 10% will be AI PCs.” He further projected that AI would significantly influence sales in 2025 and 2026.
Despite a slight year-over-year decline in revenue, from $12.9 billion in the year-earlier quarter to $12.8 billion, the results surpassed the consensus forecast of $12.6 billion. The company’s earnings for the quarter stood at $800 million, or 82 cents per share, excluding restructuring and other one-time or non-cash charges, marking a modest improvement over the previous year and exceeding forecasts by a penny. The company also reported approximately $480 million in free cash flow.
Commercial PC sales generated $6.2 billion, reflecting a 3% increase from the January 2024 quarter and a 6% rise from the April 2023 quarter, with unit sales climbing 12% year-over-year. HP attributes this growth to significant deals secured across various industries, as businesses update their hardware to accommodate the Microsoft Windows 11 operating system.
In contrast, personal PC sales declined slightly by 3% year-over-year, totaling $2.2 billion. The printing segment also showed a downturn, with $4.4 billion in sales, remaining flat sequentially and dropping 8% from April 2023. Despite this, Lores expressed optimism about a potential recovery in the latter half of this fiscal year.
Looking ahead, HP has maintained its guidance for adjusted earnings for the fiscal year ending January 2025, centering around $3.45 per share. Following these announcements, HP’s stock has seen a 9% increase this year, closing at $32.80 on Wednesday.
