HP warns US trade regulations, memory chip costs to weigh on annual forecasts
By Jaspreet Singh
Feb 24 (Reuters) - HP Inc HPQ.N now expects fiscal 2026 results to be at the low end of its forecasts, as the personal computer maker grapples with U.S. trade regulations and increasing costs due to the memory chip crisis, sending its shares down 3.6% in extended trading.
Like peers such as Dell DELL.N, HP has also taken steps including supply chain adjustments and price increases to mitigate the impact of U.S. President Donald Trump's flip-flopping tariffs and rising memory chip prices.
That helped it beat Wall Street estimates for first-quarter revenue and profit on Tuesday, driven by growing adoption of AI-powered personal computers and the ongoing Windows 11 upgrade cycle.
Analysts have said that memory chip squeeze could hit global demand for consumer electronics including smartphones and PCs, as rapid build-out of AI infrastructure by technology firms has drained much of the world's memory chip supply.
"With just one quarter behind us in a dynamic environment marked by increasing memory costs, we are holding our outlook for the year yet currently anticipate results to be closer to the low end of our range," HP CFO Karen Parkhill said in a statement.
Preliminary data from International Data Corporation suggests an expected low double-digit decline in unit shipments for smartphones and personal computers in 2026, said Jitesh Ubrani, research manager for IDC's Worldwide Mobile Device Trackers.
HP's first-quarter revenue rose 6.9% to $14.44 billion, beating analysts' average estimate of $13.94 billion, according to data compiled by LSEG.
The company's adjusted profit per share of 81 cents for the quarter ended January 31 beat estimates of 76 cents.
Revenue for the personal systems unit, which houses both consumer and commercial PCs, grew 11% to $10.25 billion. Revenue in its printing segment, which includes office-oriented printers and service offerings, fell 2% to $4.19 billion.
HP forecast second-quarter adjusted profit per share between 70 cents and 76 cents, compared with estimates of 74 cents.
China's Lenovo dominates PC market share
Global PC spending is expected to reach $219.6 billion next year
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