Personal computing and printing company HP (NYSE: HPQ) beat Wall Street’s revenue expectations in Q1 CY2026, with sales up 9% year on year to $14.41 billion. Its non-GAAP profit of $0.86 per share was 20.3% above analysts’ consensus estimates.

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StockStory’s Take

HP’s first quarter results showed resilience amid a complex market backdrop, with management crediting disciplined execution and a clear focus on high-value product categories for its performance. Interim CEO Bruce Dale Broussard pointed to the company’s ongoing efforts to strengthen its market position and accelerate the rollout of AI-driven solutions, particularly in personal systems and printing. Management emphasized the importance of strategic inventory positions and supply chain management as key contributors to margin stability, despite rising commodity costs and a competitive environment.

Looking forward, HP’s outlook is shaped by continued inflationary headwinds, especially rising memory and storage costs, and the company’s efforts to mitigate these through pricing, cost actions, and innovation. CFO Karen L. Parkhill noted that operating margins are expected to remain under pressure in the near term as input costs rise, but management is confident in its ability to drive long-term growth through disciplined execution and strategic investment in AI and edge computing. The company remains focused on expanding higher-margin product categories and scaling subscription-based offerings, while closely monitoring supply chain dynamics and cost-saving initiatives.

Key Insights from Management’s Remarks

Management highlighted the impact of product innovation, disciplined pricing, and effective supply chain strategies as primary drivers of the quarter’s results and discussed ongoing efforts to navigate input cost pressures and evolving customer demand.

• AI-driven product momentum: HP’s expansion in AI-enabled personal computers (AIPCs) drove a notable increase in shipment mix, rising from 35% to 44% this quarter. This focus on advanced compute and edge solutions is helping the company address evolving enterprise and consumer needs.
• Strategic supply chain management: Management stressed the role of strong supplier relationships and long-term agreements in securing critical memory and storage components, enabling HP to maintain cost competitiveness despite ongoing industry shortages and price volatility.
• Pricing and demand shaping: The company executed targeted repricing strategies, prioritizing high-value segments, strategic customers, and regions. These actions, combined with demand steering across product configurations, supported margin resilience and offset the impact of rising input costs.
• Growth in high-value print categories: While overall print revenue was flat, HP gained share in big tank and industrial printers, and saw continued momentum in consumer subscription services and 3D printing, reflecting its emphasis on profitable hardware placements and recurring revenue streams.
• Operational discipline and cost controls: Investments in operational efficiency, including productivity actions and sourcing optimization, continue to underpin HP’s ability to manage costs and support ongoing investment in innovation, despite macroeconomic headwinds.

Drivers of Future Performance

HP’s guidance reflects ongoing input cost inflation, a shift towards premium product categories, and sustained investment in AI and edge computing to support revenue and margin goals.

• Ongoing input cost headwinds: Management expects memory and storage costs to rise through the remainder of the year, which will pressure margins, particularly in personal systems. To counter this, HP is executing mitigation strategies such as repricing, product reconfiguration, and leveraging lower-cost inventory where possible.
• Shift to higher-margin offerings: The company is focused on expanding its mix of premium PCs, advanced compute, and subscription-based print plans, which management believes will help offset declining unit demand and support revenue growth. The continued rollout of AI-enabled products and services is seen as a key lever in maintaining pricing power and improving customer retention.
• Cost discipline and supply chain agility: Ongoing cost-saving initiatives, including supplier diversification and operational improvements, are central to HP’s ability to navigate supply constraints and inflation. Management also highlighted its ability to adapt supply planning and configuration decisions in real time to balance customer expectations and profitability.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will monitor (1) HP’s ability to manage margin pressures from rising input costs, (2) the pace of adoption for AI-enabled personal systems and print solutions, and (3) the effectiveness of supply chain strategies in maintaining inventory and pricing discipline. Additional attention will be paid to the company’s execution of its cost-saving initiatives and expansion of recurring revenue streams.

HP currently trades at $25.25, down from $25.64 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

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