HP layoffs: IT company to cut up to 6,000 jobs amid industrywide pivot to AI; customer support to be hit

HP Inc announced on Tuesday that it plans to cut between 4,000 and 6,000 jobs globally through fiscal 2028, joining a wave of tech companies accelerating their adoption of AI tools.

With these layoffs, the company aims to streamline operations and integrate artificial intelligence across workflows to speed up product development, improve customer satisfaction, and boost productivity.

Teams focused on product development, internal operations and customer support will be particularly impacted by the layoffs, CEO Enrique Lores said during a media briefing call.

“We expect this initiative will create $1 billion in gross run rate savings over three years,” Lores was quoted as saying by Reuters.

This announcement comes just months after HP laid off 1,000 to 2,000 employees in February as part of an earlier restructuring plan.

Demand for AI-enabled PCs

Customers are increasingly showing interest in personal computers equipped with specialised AI chips. This rising demand for AI-enabled PCs accounted for more than 30% of HP's shipments in the fourth quarter ended 31 October, Reuters reported.

However, these chips come at a cost. A global surge in memory chip prices, driven by rising demand from data centres, could increase expenses and squeeze profits for consumer electronics makers, including HP, Dell and Acer, Morgan Stanley analysts warned.

Big Tech's push to build AI infrastructure has triggered price increases for dynamic random access memory (DRAM) and NAND — two commonly used types of memory chips — amid high competition in the server market.

HP's CEO said that the company is bracing to feel the impact in the second half of fiscal 2026, due to higher prices, but it currently has sufficient inventory to cover the first half.

“We are taking a prudent approach to our guide for the second half, while at the same time implementing aggressive actions like qualifying lower cost suppliers, reducing memory configurations and taking price actions,” Lores said.

The PC maker has been reducing expenses and moving production outside China for most of its North America-bound products. This strategy aims to offset the impact of sweeping tariffs imposed by the Trump administration, Bloomberg reported.

HP financials and market performance

The shares of HP declined about 4% in extended trading after closing at $24.32 on Tuesday in New York. The stock had dropped 25% this year before the results were released.

The company expects fiscal 2026 adjusted profit per share between $2.90 to $3.20, which is below analysts' average estimate of $3.33, according to data compiled by LSEG.

HP's revenue for the fourth quarter was reported to be $14.64 billion, beating analysts' estimates of $14.48 billion, Reuters reported.

The company's revenue rose by 8% in HP’s PC unit, primarily fueled by customers upgrading to machines with Windows 11 and their interest in personal computers that have special AI chips, Bloomberg reported.