HP to cut thousands of jobs due to AI adoption

Computer and printer maker HP announced Tuesday (Nov 25) a sweeping restructuring plan that will eliminate about 10 per cent of its workforce globally as the company pivots toward artificial intelligence to boost efficiency.

According to its latest earnings report, the tech giant expects to reduce its global headcount by between 4,000 and 6,000 employees by fiscal 2028 to focus on adopting AI to increase innovation and customer satisfaction.

Shares of the Palo Alto, California-based company fell 5.5 per cent in extended trading.    

HP’s teams focused on product development, internal operations and customer support will be impacted by the job cuts, CEO Enrique Lores said during a media briefing call.

"We expect this initiative will create US$1 billion in gross run rate savings over three years," Lores added.

The company laid off an additional 1,000 to 2,000 employees in February, as part of a previously announced restructuring plan.

Demand for AI-enabled PCs has continued to ramp externally, reaching over 30 per cent of HP’s shipments in the fourth quarter ended Oct 31.

A global memory chip price surge brought on by rising demand from data centres could push up costs and pressure profits at consumer electronics makers such as HP, Dell and Acer, Morgan Stanley analysts have warned.

Big Tech’s push to build out AI infrastructure has triggered price increases for dynamic random access memory and NAND — two commonly used types of memory chips — amid high competition in the server market.

Major tech firms including Google, Microsoft, and Amazon have announced workforce reductions over the past two years, with many citing the need to reallocate resources, including jobs, toward AI initiatives.

Industry analysts say AI automation is particularly affecting roles in customer support, content moderation, data entry, and certain computer programming tasks.

Lores said that HP expects to feel the impact in the second half of fiscal 2026, with higher price increases. HP has enough inventory in hand for the first half.

"We are taking a prudent approach to our guide for the second half, while at the same time implementing aggressive actions like qualifying lower cost suppliers, reducing memory configurations and taking price actions," Lores said.

The company expects fiscal 2026 adjusted profit per share between US$2.90 to US$3.20, below analysts’ average estimate of US$3.33, according to data compiled by LSEG.

HP expects adjusted first-quarter profit per share between 73 cents and 81 cents, with the midpoint coming below estimates of 79 cents apiece.

Revenue for the fourth quarter was US$14.64 billion, beating estimates of US$14.48 billion.

-Agencies