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HP Inc. told investors this week that it expects the global PC market to contract next year, and the stock fell for two straight sessions as traders weighed what a smaller market means for a company that has enjoyed a strong 2026. The warning came in a regulatory filing on Monday, September 21, and it landed on a name that had run up sharply, which made the disappointment sting more.
In the filing, HP said its preliminary planning assumption is that worldwide PC unit volumes will fall by a mid-single-digit percentage in calendar 2027 compared with 2026. The company pointed out that this matches current third-party industry forecasts and that it depends on how the PC market performs during the second half of this year, a period HP described as fluid. Just as important is what the filing left out. HP is not giving financial guidance for fiscal 2027, saying it is still in its planning period, which echoes what executives said on the August 26 earnings call when they called it too early to detail next year, including PC volumes. So investors received a market forecast but no view of how it would hit HP’s own revenue or profit.
Shares slid about 2 percent on Monday and dropped again on Tuesday, even as the broader market rose. The Nasdaq gained 0.72 percent and the S&P 500 added 0.11 percent that day, so the move was specific to HP. Even after the pullback, the stock sat well above its longer-term averages, roughly 8 percent over its 50-day moving average of $29.46 and more than 36 percent over its 200-day average of $23.38, according to Benzinga. Traders were watching $32 as near-term resistance and $27 as possible support if selling picks up.
The reaction makes sense when you look at the quarter that came before. In its fiscal third quarter, HP’s Personal Systems division reported revenue up 18 percent to $11.8 billion, with commercial personal systems up 22 percent, helped by premium machines and AI-capable PCs. Yet total Personal Systems units fell 16 percent, and consumer units dropped 19 percent, a much steeper slide than the 7 percent and 8 percent declines in the previous quarter. In plain terms, HP is earning more money while selling fewer computers, a result of higher prices and a richer product mix rather than growing demand. Printing revenue slipped 2 percent to $3.9 billion. Management still raised its full-year outlook, now expecting fiscal 2026 non-GAAP earnings of $3.19 to $3.29 per share and free cash flow of $3 billion to $3.2 billion, with fourth-quarter earnings guided to $0.69 to $0.79.
The bigger concern is cost. Rising memory and storage prices, driven by heavy demand from AI data centers, have been squeezing margins across the PC industry, and analysts at Citi have argued that memory shortages could widen for years. Interim chief executive Bruce Broussard told analysts that HP is executing its mitigation plan and feels confident about memory and storage supply for this fiscal year, as well as its needs into next year and beyond. HP is due to update investors on its cost-mitigation work in its fiscal fourth-quarter report. If component costs stay high while unit volumes fall, the growth in revenue per machine that has cushioned results may not be enough.
Wall Street is not especially enthusiastic. The consensus rating is Hold, with an average price target of about $25, well below where the stock trades. RBC Capital started coverage on September 11 with a Sector Perform rating and a $33 target, while Barclays maintains an Underweight rating with a $23 target after nudging it up in August. The gap between the share price and most targets suggests investors have already priced in a good deal of optimism about the recovery.
Two things will decide how this plays out. The first is whether the PC replacement cycle, boosted by AI-capable machines and business upgrades, is enough to keep pricing strong as volumes fall. The second is whether memory costs ease or worsen, since that determines how much of the price increases HP can actually keep. The next earnings report should shed light on both, and management’s first guidance for fiscal 2027 will show how HP itself sees the year ahead.
This article is general market information, not investment advice. Anyone considering HP shares should weigh the risks, including the possibility that forecasts change, and consult a licensed advisor if needed.
