HP Inc. (HPQ) saw its shares advance modestly in premarket activity on Thursday, February 26, 2026, following the release of its fiscal first-quarter financial results. The stock moved up approximately 0.4% to $18.29, building on a prior close of $18.21. This slight uptick comes after a significant after-hours decline earlier in the week triggered by a cautious forward outlook from the personal computing and printing giant.
The company reported revenue of $14.4 billion for the quarter ended January 31, representing a 6.9% year-over-year increase. Non-GAAP earnings per share came in at $0.81, which excludes certain one-time items such as restructuring charges. The performance was driven by an 11% revenue jump in the Personal Systems segment to $10.3 billion, which achieved an operating margin of 5.0%. Conversely, the Printing segment experienced a 2% revenue decline to $4.2 billion, though it maintained a robust operating margin of 18.3%. Free cash flow for the quarter was $175 million, and HP returned about $600 million to shareholders via dividends and share repurchases.
Despite the quarterly beat, management struck a cautious tone regarding the remainder of the fiscal year. Chief Financial Officer Karen Parkhill highlighted "increasing memory costs" and evolving U.S. trade regulations as significant headwinds. As a result, while HP reaffirmed its full-year guidance, it now anticipates results will likely fall at the lower end of its projected ranges. The company's forecast calls for non-GAAP EPS between $2.90 and $3.20 and free cash flow of $2.8 to $3.0 billion.
The warning about memory chip cost volatility and supply constraints was a central theme. HP indicated the issue is persistent and expects 2026 PC unit shipments to decline by double digits, partly due to AI data-center demand straining component supplies. On a positive note, AI-capable PCs, which process artificial intelligence tasks locally, accounted for over 35% of the company's PC shipments last quarter, up from 30% previously. This shift toward higher-end products could help support average selling prices.
Leadership changes are also in focus. In a recent SEC filing, HP disclosed that Enrique Lores stepped down as CEO on February 2. Board member Bruce Broussard, who joined the board in 2021, has assumed the role of interim CEO while the company searches for a permanent successor. The board outlined its CEO succession plan in a proxy statement filed around February 25, ahead of a virtual annual meeting scheduled for April 16.
Interim CEO Bruce Broussard addressed trade policy concerns on the earnings call, noting the company is monitoring new tariff measures but does not see an immediate material impact. He stated HP would "keep engaging the administration" on trade matters. The company is implementing price increases and supply chain adjustments to mitigate cost pressures, a delicate balance as it seeks to protect margins without stifling consumer demand.
The financial update prompted several analyst firms to revise their price targets downward. According to recent reports, Amit Daryanani of Evercore ISI lowered his target to $20, Aaron Rakers of Wells Fargo reduced his to $18, and Morgan Stanley's Erik Woodring cut his target to $16. Goldman Sachs analyst Michael Ng maintained a sell rating and also slashed his price target to $16. The prevailing analyst concern centers on the risk that memory and storage costs remain elevated, potential tariff increases materialize, and HP is forced to absorb costs or stimulate demand with discounts.
Investor attention now turns to whether the premarket gains will hold through the regular trading session. Looking ahead, market participants will monitor updates on memory chip pricing, tariff developments, and the adoption trajectory of AI PCs. HP management is scheduled to present at Morgan Stanley's Technology, Media and Telecom conference on March 2, where they are expected to face questions on supply chain and trade strategies. The company's next quarterly earnings report is set for June 2.
