HPQ Q2 Earnings Beat, Full-Year Outlook Cut
HPQ Q2 earnings beat estimates on AI PC demand, but HP trimmed FY26 profit guidance, balancing investment in AI-optimized PCs with capital returns.
KEY TAKEAWAYS
- Q2 revenue rose to $14.4 billion and non-GAAP EPS was $0.86.
- Personal Systems growth was driven by strong demand for AI-optimized PCs and Windows 11 refresh.
- HP trimmed FY26 non-GAAP EPS guidance to $2.90-$3.10 to fund AI PC investment.
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HP Inc. (NYSE: HPQ) reported stronger-than-expected fiscal 2026 second-quarter results on May 27, 2026, driven by brisk demand for AI-optimized PCs. The company raised near-term earnings guidance but trimmed its full-year profit outlook while emphasizing capital returns.
AI PCs Drive Stronger Quarter
For the quarter ended April 30, 2026, HP posted net revenue of $14.4 billion, up 9.0% year over year (6.3% in constant currency), with non-GAAP diluted earnings per share (EPS) of $0.86, a 21.0% increase. GAAP diluted EPS was $0.67, and GAAP net earnings reached $0.7 billion. The company said these results exceeded prior guidance.
Personal Systems, which includes PCs and related devices, led revenue growth with double-digit gains fueled by strong demand for AI-optimized PCs and a Windows 11 refresh cycle. Management highlighted new AI-capable notebook launches during the quarter and plans for additional product rollouts in the second half of fiscal 2026. Printing revenue grew in the low single digits, supported by modest hardware unit growth and mixed supplies trends.
Guidance Cut and Capital Priorities
HP lowered its full-year fiscal 2026 non-GAAP diluted EPS guidance to a range of $2.90 to $3.10, citing shifts in PC mix, increased investment in AI products, and macroeconomic and competitive pressures. The company raised its third-quarter EPS guidance to a range of $0.61 to $0.71.
The company reaffirmed its strong balance sheet and long-term capital allocation strategy. On May 19, 2026, the board declared a regular quarterly cash dividend. Management discussed ongoing share repurchase activity and remaining authorization, emphasizing continued cost discipline as a key driver of margin expansion.
The second-quarter presentation highlighted non-GAAP operating margin growth, driven by a higher Personal Systems mix and recent cost actions. HP reiterated its free cash flow targets for the year. Management described fiscal 2026 as an inflection year for personal computers, committing to structural savings and mix optimization while investing in AI PCs, hybrid work solutions, and services to support medium-term growth despite the trimmed near-term EPS outlook.
