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HP (HPQ) Valuation in Focus After Restructuring, AI Push, Layoff Plan, and Mixed Earnings Reveal

Simply Wall St·12/02/2025 11:11:56
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HP (HPQ) is making waves with its recently announced plan to restructure operations, targeting up to 6,000 layoffs and $1 billion in cost savings by 2028. In addition, management highlighted a renewed emphasis on AI innovation as the company adapts to industry shifts, with fresh earnings revealing revenue growth but softer profits and guidance than many investors anticipated.

See our latest analysis for HP.

HP’s recent raft of updates, including cost-cutting, a new AI push, the latest dividend increase, and legal wins, has come against the backdrop of what has been a difficult year for shareholders. After an extended period of lackluster price action, HP’s one-year total shareholder return is down 31.0%. This reflects fading momentum even as the company makes moves to spark a turnaround and unlock new opportunities.

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Now, with HP shares trading near multi-year lows and analysts split on the path forward, investors are left asking a crucial question: does HP represent a bargain with upside, or is the market already discounting any potential recovery in growth?

Most Popular Narrative: 5.9% Undervalued

Compared to HP’s last close of $24.39, the most popular narrative pegs fair value at $25.93, suggesting the shares trade at a modest discount. While the gap is not dramatic, this difference puts a spotlight on the numbers supporting the narrative’s thesis.

Persistent structural cost reduction initiatives, including manufacturing diversification outside China, AI-enabled automation, and a $2B annualized savings target, are set to drive sustainable improvements in net margins and bottom-line earnings resilience. HP's focus on responsible innovation and sustainability, exemplified by significant recycled content in devices and advances toward net zero, aligns with growing enterprise and consumer preference for eco-friendly technology, strengthening competitive positioning and supporting revenue and margin growth over the long term.

Read the complete narrative.

Curious what powers this valuation? Discover the underlying forecasts that shape HP’s outlook, including future earning profiles and margin trends. The details may surprise you, so dive in to see what the narrative says about where HP could be headed next.

Result: Fair Value of $25.93 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent declines in HP's core print segment and intensifying price competition could easily limit any recovery and put additional pressure on profit margins.

Find out about the key risks to this HP narrative.

Build Your Own HP Narrative

If you see HP’s story unfolding differently or want to dig into the numbers firsthand, you can quickly shape your own perspective in just a few minutes. Do it your way

A great starting point for your HP research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.