HP Inc. shares closed Friday at $25.24, marking a 15.25% surge and a six-day winning streak. The stock now sits approximately 21% above its May 15 close, driven by investor optimism ahead of the company's fiscal second-quarter earnings report due after Wednesday's market close.
The rally comes as the broader market closed for the Memorial Day weekend, with trading set to resume Tuesday. HP's earnings call is scheduled for 5:30 p.m. ET on Wednesday, and the results will test whether the recent upward momentum is sustainable.
The key question for investors is whether demand for AI-powered PCs—laptops and desktops designed to handle artificial intelligence workloads locally—can offset rising component costs and weakness in HP's printing division. The company has already set expectations, forecasting GAAP diluted EPS of 52 to 58 cents and non-GAAP diluted EPS of 70 to 76 cents for the fiscal second quarter.
Management has attempted to strike a balanced tone. Interim CEO Bruce Broussard highlighted 'continued momentum in AI PCs,' while CFO Karen Parkhill acknowledged a 'dynamic environment marked by increasing memory costs' and noted ongoing mitigation efforts. HP has warned that volatility in memory chip prices could persist into next year.
AI PCs accounted for more than 35% of HP's total PC shipments in the first quarter, up from 30% in the prior quarter. However, Gartner analyst Rishi Padhi cautioned that first-quarter PC shipment growth was 'artificially inflated' due to inventory builds ahead of expected price increases, rather than genuine end-user demand. This raises the risk that a strong shipment number may not translate into sustained demand once channel inventories are normalized.
The competitive landscape provided some tailwinds. Lenovo, the world's largest PC maker, reported a better-than-expected 27% jump in quarterly revenue on Friday, sending its shares up 15%. Lenovo's CEO Yang Yuanqing noted a 'heavy shortage' of memory chips and rising costs, but the strong results boosted investor appetite for hardware stocks. HP and Dell led S&P 500 gainers on Friday, with the broader index posting an eighth consecutive weekly gain.
HP also announced a quarterly dividend of 30 cents per share, payable July 1 to shareholders of record as of June 10. This provides income investors with a clear catalyst.
Wall Street remains cautious. JPMorgan analyst Samik Chatterjee raised HP's price target to $22 from $19 last week but maintained a Neutral rating. The firm cited easing memory-related concerns for the IT hardware rally but expressed more optimism for Dell Technologies and Hewlett Packard Enterprise heading into earnings.
For HP, next week is about proving that price increases, supply-chain adjustments, and AI PC demand can protect margins without sacrificing unit sales. A miss on that front would make Friday's rally look less like a reset and more like a squeeze before earnings.
