Goldman Sachs: HP Inc. (HPQ.US) — Key Takeaways from Investor Group Meeting
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Key Views
PS segment operating margin is expected to trough in F4Q26 before recovering to the 5–7% target range in F2027, driven by input cost mitigation strategies including sourcing from Chinese memory suppliers (CXMT, YMTC), operational improvements via the Workforce Experience Platform, and broad cost reductions. AI PC adoption is accelerating, with AI PCs rising to 44% of the shipment mix (from 35% the prior quarter), targeting 60–70% by F2027. AI PCs carry gross margins several hundred basis points above non-AI PCs. However, HP models conservatively for industry PC unit TAM to decline by a high-single-digit percentage in C2027 as enterprise CIOs rebalance IT spending priorities.
Printing margins face near-term pressure from hardware mix shifts and aggressive pricing by Japanese competitors leveraging yen weakness. HP secured US Customs approval for a partial refund of approximately $500 million in tariffs paid last year, though cash recovery timing and accounting treatment remain undetermined.
Recommended Securities
HPQ.US: Sell rating, 12-month target price of $19.00, based on 6.0x NTM+1-year EPS. Current price: $24.13, implying 21.3% downside. Key upside risks include stronger PC demand, lower input cost impacts, and share gains in high-margin categories.