To The Moon

$HP Inc(HPQ)$ is scheduled to report its fiscal first-quarter 2026 earnings on Tuesday, February 24, 2026, after the market close.

Following a solid Q4 2025 where HP beat expectations on both top and bottom lines, the focus for Q1 shifts to the sustainability of the PC recovery and the impact of rising component costs.

Q1 2026 Consensus Estimates

HP's fiscal Q4 2025 results, reported in late November 2024, depicted a company successfully returning to revenue growth but facing a significant "margin squeeze" that dampened investor enthusiasm.

Q4 2025 Earnings Summary

HP delivered its sixth consecutive quarter of revenue growth, though the bottom line reflected the impact of rising costs and a shifting product mix.

• PC Strength: Personal Systems grew 8%, driven by a mix of Windows 11 refresh cycles and AI PC adoption. AI PCs accounted for over 30% of total shipments during the quarter.

• Printing Drag: The printing segment continued to struggle with unit declines (-12% YoY), though higher-margin subscription services (approaching $1B in annual revenue) helped offset some hardware weakness.

Lessons Learnt from Guidance

While the Q4 "beat" was positive, the stock faced pressure due to a cautious FY2026 outlook. The primary lessons for investors were:

1. The "Memory Headwind" is Real

HP issued FY2026 EPS guidance of $2.90–$3.20, which was significantly below the analyst consensus of $3.32.

• The Reason: Management quantified a $0.30 per share impact specifically from rising memory (DRAM/NAND) costs.

• Lesson: For hardware manufacturers, volume growth can be easily erased by commodity price cycles. HP signaled it would use "tactical pricing" to fight back, but expected Personal Systems margins to stay at the low end of their 5%–7% target.

2. AI PCs are a "Slow Burn" for Margins

Despite AI PCs making up 30% of shipments, they haven't yet provided the massive margin "pop" some bulls expected.

• Lesson: AI PCs are helping HP maintain its Average Selling Price (ASP), but the higher component costs associated with these advanced machines mean the benefits are currently more about market share retention than immediate profit expansion.

3. Efficiency is the Only Lever Left

Along with the earnings report, HP announced a new $1 Billion cost-saving plan through 2028, involving a headcount reduction of 4,000–6,000.

• Lesson: With the Printing segment in structural decline and PC margins under pressure, HP is pivotally dependent on internal "Future Ready" initiatives to drive earnings growth.

4. Shareholder Returns are the Safety Net

Despite the guidance miss, HP raised its dividend for the 10th consecutive year.

• Lesson: Management is committed to using its $2.8–$3.0 Billion free cash flow to floor the stock price. This makes HP a "total return" or "value" play rather than a high-growth tech play.

Key Metrics to Watch

Investors should focus on these three primary pillars to gauge HP's health:

• AI PC Adoption & Windows 11 Refresh: Management previously targeted AI PC penetration of 40–50% by the end of 2026. Look for whether AI PC shipments (which were >30% in Q4) continue to scale. The Windows 11 refresh remains a tailwind as roughly 40% of the installed base was still on Windows 10 at the start of the fiscal year.

• Operating Margins vs. Memory Costs: DRAM prices reportedly rose significantly between December and January. HP guided Personal Systems margins toward the low end of their 5%–7% range for FY2026 to account for these "memory headwinds." Any beat on margins would suggest successful price adjustments or better-than-expected supply chain management.

• Printing Segment Recovery: Printing has been a laggard (down 4% in Q4). Analysts are watching for signs of stabilization in Commercial Printing and the growth of the "Big Tank" and subscription-based models, which offer higher-margin recurring revenue.

HP (HPQ) Price Target

Based on 16 analysts from Tiger Brokers app offering 12 month price targets for HP in the last 3 months. The average price target is $23.24 with a high forecast of $30.00 and a low forecast of $18.00. The average price target represents a 25.54% change from the last price of $18.59.

Short-Term Trading Analysis

HP is currently in a complex technical position, trading near 52-week lows ($18–$20 range) while the broader market is near highs.

• The Bull Case (The "Beat and Raise"): If HP exceeds the $0.77 EPS consensus and maintains its FY2026 guidance ($2.90–$3.20), the stock could see a relief rally. With a P/E ratio around 7x and a dividend yield of ~6.1%, the downside may be partially cushioned by value-seekers.

• The Bear Case (The "Margin Squeeze"): The "Earnings ESP" (Expected Surprise Prediction) is currently slightly negative (-0.65%), and analysts have revised EPS estimates downward by ~1.8% over the last 30 days. If memory costs have squeezed margins more than anticipated, or if Printing continues its double-digit unit decline (it was -12% in Q4), the stock could test the $18.00 support level.

• Implied Volatility: Historically, HP's post-earnings move averages around 5–7%. Traders might look at the $19–$21 straddle if they expect a decisive breakout from the current downtrend.

Note: Insiders, including the CEO, sold shares in December 2025. While often routine, large-scale selling ahead of a fiscal year can sometimes signal a cautious internal outlook on short-term growth.

Technical Analysis - Exponential Moving Average (EMA)

We can see that HPQ have been trading on the decline with the fear of AI bubbles, and also the selling off of AI software related stocks, and currently, it is trading below the 26-EMA level, and there is a further downside expected if investors does not have confidence that HPQ could transit into AI-driven hardware while fending off competition.

So if it continue to show strong growth in the EMEA and APJ region, and also improvement in the Americas region, then we might be able to see a recovery of the stock price, but currently this share price looks attractive to buy in for the high dividend yield.

Summary

HP Inc. (HPQ) is set to report its fiscal Q1 2026 earnings on Tuesday, February 24, 2026. Following a cautious guidance update in late 2025 and a recent leadership transition, market sentiment is currently braced for a "wait-and-see" quarter.

Financial Forecasts

• Revenue: Analysts expect $14.06 billion, a 4.1% year-over-year increase.

• Earnings Per Share (EPS): The consensus sits at $0.77, aligning with the company’s narrowed guidance of $0.73–$0.81.

• Recent Revisions: EPS estimates have seen a slight 1.8% downward revision over the last 30 days, reflecting concerns over persistent component costs (DRAM/NAND) and soft printing demand.

Strategic Pillars to Watch

1. AI PC Adoption: This is the critical growth narrative. Investors will watch if AI PCs continue to make up 30%+ of shipments and if they are finally beginning to lift Average Selling Prices (ASPs) enough to offset rising build costs.

2. Margin Protection: Management previously warned of a $0.30 per share headwind from memory pricing for FY2026. Any indication that these costs have stabilized—or were successfully passed to consumers—could trigger a relief rally.

3. Leadership Transition: With Enrique Lores recently stepping down and Bruce Broussard taking over as interim CEO, the market will look for stability in execution and clarity on the search for a permanent successor.

Trading & Valuation Outlook

The stock is currently trading at a historically low P/E ratio (~7x) and a high dividend yield of ~6.1%, which may provide a "valuation floor."

• The Bull Case: A "beat and raise" on FY2026 guidance could spark a rally toward the median analyst target of $23–$25.

• The Bear Case: If the "margin squeeze" from memory is worse than the projected 5–7% range, the stock could test its multi-year support levels near $18.00.

Overall, the Q1 report is less about a massive revenue surge and more about proving that HP can maintain profitability while transitioning to the AI-driven hardware cycle.

Appreciate if you could share your thoughts in the comment section whether you think HPQ could continue to maintain profitability while it navigate the AI race with on-going transition to AI-driven hardware cycle.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.