HP Inc

CrowdStrike, Okta, and HP Inc. reported earnings after the bell, with shares moving sharply in opposite directions. CrowdStrike jumped after a strong second quarter, with revenue and adjusted earnings topping expectations and annual recurring revenue reaching almost $6 billion, also above estimates. The company raised its full-year revenue outlook, citing strong demand as AI-driven cyber threats grow. Okta also surged after raising its full-year outlook for a second time, now expecting revenue growth of 10 to 11% with a record subscription backlog, and noting that new products make up 30% of bookings. In contrast, HP Inc. plunged despite beating estimates on the top and bottom lines and issuing upbeat guidance, as investors worried about worsening PC and printer sales and rising memory chip costs leading to higher consumer prices.

HP Inc reported third-quarter results that beat analyst expectations, but shares fell over 9% in after-hours trading Wednesday as investors took profits following an 18.5% gain in the past month. The company posted adjusted earnings per share of $0.83, beating the consensus of $0.66, and revenue of $15.7 billion, up 12.5% year-over-year and above the $14.34 billion estimate, with results including a favorable $0.11 impact from tariff refunds. HP raised its full fiscal year 2026 adjusted EPS guidance to a range of $3.19 to $3.29, with a midpoint of $3.24 that exceeds the consensus of $3.04, and for the fiscal fourth quarter it expects adjusted EPS of $0.69 to $0.79, including an $0.08 favorable impact from estimated tariff refunds. The company also raised its free cash flow outlook for fiscal 2026 to $3.0 billion to $3.2 billion. In the Personal Systems segment, revenue rose 18% to $11.8 billion, though total units declined 16%, while the Printing segment saw revenue of $3.9 billion, down 2% year-over-year. HP generated $1.6 billion in free cash flow during the quarter and returned $574 million to shareholders through $300 million in share repurchases and $274 million in dividends, ending the quarter with $4.2 billion in gross cash.

The U.S. government is not in favor of Apple buying memory chips from Chinese companies, Commerce Secretary Howard Lutnick said in an interview, according to The Wall Street Journal. Amid an AI-driven supply crunch in computer memory, Apple and other device makers such as HP are increasingly looking at China for supplies as demand keeps rising, sending prices for the critical component sharply higher. This week, the Journal reported that Apple has been testing memory chips from Chinese semiconductor maker CXMT with plans to use them in its product lines, including iPhones and MacBooks. While federal rules require U.S. firms to obtain a license before transferring product information to Chinese chipmakers CXMT and Yangtze Memory Technologies, Apple is not barred from buying their off-the-shelf components and engaging in pricing talks with them. Lutnick said the Trump administration is not in favor of that, and there should be other solutions to the memory issue, but it's not great American companies using Chinese memory. He added that the White House continues to urge Apple to boost its U.S. manufacturing footprint, saying the company has built its supply chains on low-cost labor and now needs to build a supply chain on advanced manufacturing.

Microsoft is set to report fourth-quarter fiscal 2026 results on July 29, with total company revenues expected between $86.7 billion and $87.8 billion, representing growth of 13% to 15%. The Zacks Consensus Estimate for revenues is $87.42 billion, indicating 14.36% year-over-year growth, while the consensus earnings estimate has edged down 0.2% over the past 30 days to $4.21 per share, suggesting 15.34% growth. Azure constant-currency growth is guided at 39% to 40%, similar to the prior quarter, though management reiterated that capacity constraints will persist through 2026. Capital expenditures are expected to exceed $40 billion for the quarter, part of a roughly $190 billion calendar-2026 total, which is expected to compress operating margin to roughly 44% from 46.3% in the prior quarter. The More Personal Computing segment faces headwinds, with the consensus estimate pointing to a 10.5% year-over-year revenue decline to $12.03 billion, as worldwide PC shipments fell 4.9% in the second quarter of 2026, the first decline after nine consecutive quarters of growth.

A Bernstein survey of 100 U.S. and European CIOs found net spending intentions for IBM remain deeply negative and continue to deteriorate, even as overall CIO expectations for IT spending stayed broadly constructive. Analyst Mark Newman said Bernstein forecasts 2026 IT spending growth in line with Gartner's estimated 12%, noting sentiment has diverged regionally, with European CIOs becoming more pessimistic than their American counterparts. Cybersecurity software remained the top spending priority, followed by GenAI and storage, while spending intentions were weakest for traditional infrastructure categories including x86 servers, mainframes and printers. Across vendors, IBM alongside HP Inc. and HPE showed deeply negative net spending intentions, though HP and HPE were both improving, while Dell continued to fare better than its infrastructure peers and also improved versus prior surveys. In cloud and software, Microsoft, Amazon and ServiceNow ranked highest, with Microsoft and OpenAI viewed as the leading long-term AI platforms.

Lenovo Group, the world's largest PC vendor, saw its worldwide desktop and notebook shipments drop 2.1% year-over-year in the second quarter of 2026, according to Omdia. Global shipments of desktops, notebooks and workstations fell 3.6% to 65.7 million units, as higher memory and storage costs pushed up PC prices and weakened demand. Lenovo's market share rose to 25.3% from 24.9% a year ago, while HP's shipments declined 9% and Dell's fell 4.9%. Despite near-term headwinds, Lenovo's diversification into AI infrastructure, hybrid cloud and services is expected to support long-term growth, and the stock carries a Zacks Rank of 1, or Strong Buy.

Global PC shipments declined about 5% in the second quarter, reversing nine consecutive quarters of growth, as an AI-fueled memory shortage drives up laptop prices. Major manufacturers including HP, Dell, Microsoft, and Apple have raised prices on their devices due to soaring costs for DRAM memory, which is heavily consumed by both AI data centers and traditional computing. Deep-pocketed data center operators are buying up available DRAM supply, squeezing the PC market and pushing revenue higher even as unit shipments fall. The shortage could persist for years, with some forecasts extending into the next decade, prolonging pressure on the PC industry.

Global PC shipments fell 3.6% year-over-year to 65.7 million units in the second quarter of 2026, according to Omdia, as rising memory and storage costs pushed up prices and dampened demand. Desktop workstation shipments declined 1.3% to 13.9 million units, while notebook shipments including mobile workstations fell 4.2% to 51.7 million units. A June survey found about 60% of channel partners said customers were delaying or canceling PC refreshes due to supply constraints and higher prices, with comparable product line prices up 20% to 40% from a year earlier. Lenovo led the market with a 25.3% share, followed by HP at 19.8% and Dell at 14.1%, while Apple increased its share to 11.1% from 9.2% a year earlier on strong MacBook demand.

Dell Technologies is the better buy for growth investors seeking AI infrastructure exposure, while HP offers a value alternative with lower risk. Dell's AI server revenue surged 757% year-over-year in its fiscal 2027 first quarter, contributing to 88% overall revenue growth, and the company expects $60 billion in AI server revenue for the full fiscal year. HP's revenue grew just 9% in its fiscal 2026 second quarter, and its third-quarter earnings guidance implies a year-over-year decline, with no revenue outlook provided. Dell trades at a price-to-earnings ratio of 31.8, reflecting its faster growth and market share gains, while HP's P/E of 8.5 and recent 20% correction may appeal to value investors.

Apple raised prices on several MacBook models this week, with the MacBook Pro jumping from $1,699 to $1,999 and the MacBook Neo from $599 to $699, as a severe shortage of memory chips forces PC and gadget makers to pass on rising costs. The crunch, dubbed 'RAM-ageddon,' stems from AI data center operators consuming massive volumes of memory, particularly high bandwidth memory, which reduces supply for consumer devices. Microsoft also increased Xbox prices by $100 to $150 and dropped its 2-terabyte configuration, while Dell, HP, Lenovo, and Asus have similarly raised prices or cut memory. Analysts at Deutsche Bank and Jefferies expect memory prices to keep climbing, with forecasts of 30% to 45% increases through 2027, and IDC's Nabila Popal predicts Apple may soon be forced to raise iPhone prices as well.

Apple CEO Tim Cook and Tesla CEO Elon Musk have both issued stark warnings about an unprecedented surge in costs hitting the technology supply chain. Cook described the situation as a 'hundred-year flood' and said he has never seen anything like it in over 40 years, while Musk called it the 'biggest price jump' he has ever witnessed. The warnings came as Apple prepared to raise prices on its products to offset soaring costs for memory and storage chips, with Cook stating that price increases are unavoidable. On June 25, Apple announced price hikes of hundreds of dollars for Macs and iPads, and other major device makers such as Hewlett-Packard, Dell, and Nintendo have already raised prices. The Wall Street Journal reported that prices for memory and storage chips have quadrupled since last year amid surging demand driven by the artificial intelligence buildout.

HP shares have declined 8.4% since its last earnings report, underperforming the S&P 500. The company reported fiscal second-quarter 2026 adjusted earnings of 86 cents per share, beating the Zacks Consensus Estimate by 19.4%, while revenue rose 9% year over year to $14.4 billion. Personal Systems revenue, which accounts for 71% of net revenues, grew 13% to $10.2 billion, but total PC units fell 7%. Printing revenue, making up 29% of net revenues, was flat at $4.2 billion, with total hardware units down 7%. HP narrowed its full-year non-GAAP earnings guidance to a range of $2.90 to $3.10 per share, from the prior $2.90 to $3.20, and set third-quarter guidance at 61 to 71 cents per share.

Apple shares tumbled 6.1% overnight, wiping roughly 270 billion US dollars off its market value in the steepest single-day drop since April 2025, after the company announced price increases on several MacBook and iPad models to pass on soaring memory and storage costs. The MacBook Air with 512 gigabytes of storage rose to 1,299 dollars from 1,099 dollars, while the iPad Air with 128 gigabytes of storage climbed to 749 dollars from 599 dollars. Apple said it had never seen a component price increase this much, this quickly, as AI-driven demand from chipmakers like Nvidia has created a memory supply shortage. The sell-off spread across the tech sector, with Dell, HP, and Lenovo losing between 4% and 5%, Samsung falling more than 8%, and Asian indexes such as South Korea's Kospi and Japan's Nikkei dropping sharply.

Goldman Sachs raised its price target on HP Inc. to $19 from $16 while reiterating a Sell rating following the company's second-quarter earnings report. The firm cited sharp increases in input costs and growing competition in the PC market that could make it difficult for HP's product mix shifts, price increases, and supply chain measures to fully offset industry headwinds in the second half of fiscal 2026 and into fiscal 2027. BofA also increased its price goal on HP to $18 from $16 and maintained an Underperform rating, noting better-than-expected fiscal second-quarter results but a narrowed upper end of fiscal 2026 earnings per share guidance and an unchanged free cash flow forecast of $2.8 billion to $3 billion. BofA's Underperform rating reflects concerns about slower growth in PC unit sales, margin pressure from higher memory costs, and uncertainty surrounding the company's leadership transition.

StockStory identifies HP, Perella Weinberg, and Enova as profitable companies that warrant caution. HP, with a trailing 12-month GAAP operating margin of 5.3%, has seen sales decline 1.2% annually over five years and flat earnings per share despite incremental sales. Perella Weinberg, at a 3.4% margin, posted only 2.9% annual revenue growth over five years and a 25.6% annual EPS drop over four years, with negative returns on capital. Enova, at a 13.1% margin, showed 8.5% annual EPS growth lagging revenue gains and carries a 5× net-debt-to-EBITDA ratio that may limit further borrowing.