HP beat expectations in Q2 FY2026 and raised its full-year EPS guidance, driven by strong Personal Systems growth and effective cost mitigation. However, management provided a cautious outlook for the second half, expecting rising memory, storage, and oil-related costs to pressure margins, with Q4 seen as the low point. Q2 revenue grew 9% YoY, EPS was $0.86, and FCF was ~$800M, all above expectations.
HP beat expectations in Q2 FY2026 and raised its full-year EPS guidance, driven by strong Personal Systems growth and effective cost mitigation. However, management provided a cautious outlook for the second half, expecting rising memory, storage, and oil-related costs to pressure margins, with Q4 seen as the low point. Q2 revenue grew 9% YoY, EPS was $0.86, and FCF was ~$800M, all above expectations.
Management emphasized AI moving to the edge as a significant opportunity, with AIPC mix rising to 44% of shipments and strong demand from enterprises and governments. They highlighted partnerships with 150+ software companies and innovations like HP IQ and AI stations to…
Management expressed confidence in execution and mitigation strategies but acknowledged rising input costs and a challenging back half, maintaining a cautious yet upbeat posture.
Personal Systems revenue grew 13% YoY, with AI PC mix rising to 44% of shipments.
Guidance tone
Management emphasized AI moving to the edge as a significant opportunity, with AIPC mix rising to 44% of shipments and strong demand from enterprises and governments. They highlighted partnerships with 150+ software companies and innovations like HP IQ and AI stations to capitalize on edge AI workloads.
PC unit TAM expected to decline high teens in second half.. Management expressed confidence in execution and mitigation strategies but acknowledged rising input costs and a challenging back half, maintaining a cautious yet upbeat posture.
Capex not prominently discussed; focus was on operational cost savings and supply chain management rather than infrastructure investment.
Management expressed confidence in execution and mitigation strategies but acknowledged rising input costs and a challenging back half, maintaining a cautious yet upbeat posture.
“We have secured the memory and storage we need for the fiscal year through strong supplier relationship and long-term agreements.”
“There was some pull forward in commercial PS, as we mentioned. And we estimate that that added roughly 2% to 3% of revenue.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| EPS | FY2026 | $2.90–$3.10 | $3.00 | RAISED |
| EPS | FY2026 Q3 | $0.61–$0.71 | $0.66 | GUIDED |
| Free cash flow | FY2026 | $2.8B–$3B | $2.9B | GUIDED |
| Issued | Metric | Target | Guide | Actual | Outcome |
|---|---|---|---|---|---|
| FY2026 Q1 | EPS | FY2026 Q2 | $0.70–$0.76 | $0.86 | Met / beat |
| FY2025 Q4 | EPS | FY2026 Q1 | $0.73–$0.81 | $0.81 | Met / beat |
HP is collaborating with Zoom to integrate AI capabilities into its AI PC ecosystem, which could expand Zoom's enterprise reach.
“Previously, we highlighted our collaboration with partners like Zoom and CrowdStrike.”
… physical environment. We continue to believe the future of AI is hybrid, with edge playing an increasingly important role over time. Building on this opportunity, we recently unveiled a wave of innovation at our HP Imagine event, our annual global technology showcase of new products and solutions. In personal systems, we introduced the next generation AI PCs and expanded local AI capabilities with an ecosystem of more than 150 software companies of all sizes. Previously, we highlighted our collaboration with partners like Zoom and CrowdStrike. Today I want to showcase other software partners. GoodNotes, for example, is leveraging the NPU for local audio transcription and summarization, while AI Producer is transforming our AI PCs into professional production studios. These are just a few examples of how we are enhancing productivity, output, and workflow experience for our customers. To bring data center capabilities directly to the desktop in order to support the most demanding AI and compute workloads, we introduced new Z workstations and AI stations. These purpose-built devices enable customers to develop, run inference, and scale AI workloads, providing greater control …
HP says it has secured the memory and storage it needs for the fiscal year through long-term agreements, mitigating near-term supply risk but locking in higher costs. — This signals that memory suppliers have pricing power and that HP's margins will be squeezed until supply normalizes in its fiscal 2027.
Hey, thanks for taking the question. This is Brian on for David. So regarding my first one, it's on memory sources slash allocation. Can you just speak to the ability to access new or incremental sources to offset the pricing pressures you're seeing? And I have a quick follow-up. Thank you.
Thanks for the question. I'll take this. We have secured the memory and storage we need for the fiscal year through strong supplier relationship and long-term agreements. And on top of it, we have fully operationalized our supply-informed planning model that aligns demand, supply, and configuration details, decisions in real time. And our strategic inventory position helped us to remain cost competitive while we remain disciplined on pricing and cost, executing a differentiated repricing, and multiple cost actions across sourcing, platforms, and productivity. And the speed of recovery differs by customer segment, by geography, by channel type. But balancing this mix to maximize meeting the customer expectations and cost recovery will continue to remain our focus.
HP is seeing demand pull-forward in commercial PCs ahead of rising commodity prices, with an estimated 2-3% revenue boost in Q2 that is expected to reverse in the second half. — This suggests PC industry-wide demand is being pulled ahead, leading to a sharper expected decline in unit shipments in 2H26 across the industry.
Good afternoon, everyone. Thanks for taking my question. I guess maybe the first one to start with, could you just help us frame or help us think about the size or the extent of which the full-staff commercial strength that we saw on the personal system side benefited from pull-forward dynamics versus what you think is a more durable underlying demand, given the fact you do have a Windows-referenced AI PC transition system? I'd love to just understand, on the commercial PC side, how much of the strength you saw was pull forward versus underlying trends?
Yeah, thanks for the question, Amit. You know, we were pleased with the double-digit growth we delivered in both consumer and commercial PS, and that was supported by disciplined pricing along with a richer mix and continued services expansion. There was some pull forward in commercial PS, as we mentioned. And we estimate that that added roughly 2% to 3% of revenue. I hope that helps.