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HP Inc. delivered its eighth consecutive quarter of top-line growth in Q2 FY26, with revenue of $14.4B rising 9% year-over-year and non-GAAP EPS of $0.86 beating guidance of $0.70–$0.76. Disciplined mitigation of rising memory and storage costs drove outperformance, though margin pressure is expected to intensify through the back half of the year.
Performance Highlights
HP Inc. reported Q2 FY26 revenue of $14.4 billion, up 9% year-over-year and 6.3% in constant currency, ahead of consensus expectations, while non-GAAP diluted EPS of $0.86 exceeded the guided range of $0.70–$0.76 by a meaningful margin. Free cash flow of approximately $800 million also surpassed expectations, supported by strong Personal Systems execution and disciplined pricing.
Personal Systems was the primary growth engine, with segment revenue up 13% year-over-year and operating profit surging 30%, as AIPC mix expanded from 35% to 44% of shipments and repricing actions successfully offset rising memory and storage costs. Print revenue was flat year-over-year as expected, with supplies flat in constant currency—better than the low-single-digit decline guided for the full year—while Industrial Graphics posted its eleventh consecutive quarter of growth and 3D printing delivered double-digit gains for a fifth straight quarter.
Management Outlook and Forward Catalysts
Management raised full-year non-GAAP EPS guidance to $2.90–$3.10, reflecting greater confidence in its four-pillar cost mitigation playbook, though Q3 EPS is guided to $0.61–$0.71 as rising input costs and demand pull-forward effects weigh on the second half. Full-year free cash flow guidance was reaffirmed at $2.8–$3.0 billion, with Personal Systems operating margins expected to trough in Q4 before recovering sequentially into FY27.
The central investor debate is whether HP's pricing and cost actions can adequately offset accelerating memory, storage, and resin cost headwinds through Q3 and Q4, or whether margin compression will prove deeper and more prolonged than guided. Bulls will monitor AIPC mix progression toward the 60–70% FY27 target and Windows 11 refresh momentum across the remaining ~30% of the installed base still on Windows 10, while bears will focus on unit TAM deterioration—guided down high-teens in the second half—and the sustainability of EPS recovery into FY27 given a sub-$0.70 quarterly run rate implied by back-half guidance.
Adjusted EPS vs. consensus breakdown — primary performance driver, segment revenue contribution, and gross margin trajectory relative to prior guidance...
Segment-by-segment revenue analysis, margin profile, and management commentary on demand trajectory vs. consensus range expectations...
Forward guidance implications for the sector, supply chain read-throughs, and investment implications for the broader competitive landscape...
