HP Stock Jumps on Solid Earnings, Optimism for AI-Powered PCs

Shares of HP Inc. (HPQ) surged Thursday, a day after it reported solid earnings and signaled that it could continue to be a beneficiary of the artificial intelligence (AI) boom.

HP reported total revenue for the second quarter of fiscal 2024 of $12.8 billion, down slightly from last year’s $12.91 billion but better than the $12.59 billion analysts had expected, according to estimates compiled by Visible Alpha. Personal Systems net revenue, which includes PCs and servers, grew 3% year-over-year to $8.4 billion, but its Printing unit reported an 8% drop to $4.4 billion.

Net income of $607 million, or 61 cents per share, missed estimates of $678.9 million and 69 cents per share thanks to just over $200 million in one-time charges. After stripping out the charges, HP’s adjusted profits of $812 million, or 82 cents per share, beat estimates of $803.5 million and 81 cents per share.

“We delivered a solid quarter and first half, and unveiled an innovative portfolio of solutions designed for the AI and hybrid era,” HP Chief Executive Officer (CEO) Enrique Lores said. “As the market recovers and new AI PCs are introduced, we are well positioned to drive profitable growth across our business.”

HP Positioned To Benefit From AI Era

HP’s stock price previously has benefited from optimism around AI, as Lores has said in past quarters that while it will take time for the company to see widespread adoption of its new products like AI PCs, the new technology could be a significant driver of growth in 2025 and beyond.

“Initial reaction has been overwhelmingly positive with our next-gen devices being recognized as some of the most premium announced and having beyond cutting-edge hardware,” Lores said in Wednesday’s earnings call.

He also said the company expects demand will be higher than the average new-PC release cycle when it begins rolling out its AI-powered computers in the second half of the year. The company’s range of AI products, from commercial products to those for personal use and video games, puts it in position to “capture the opportunity and lead the industry,” Lores said.

AI-powered PCs are projected to be about 10% of HP’s computer sales in the second half of the year, but Lores said over the next three years, HP expects that figure to rise to 40% to 60% of PC sales, with the new computers on average priced 5% to 10% above current models.

HP shares jumped 17% by 12:07 p.m. ET Thursday to $38.43, their highest level in two years.