Tech giant HP Inc. is making a major commitment to AI, but the move comes with a steep human cost: the company plans to eliminate 4,000 to 6,000 jobs globally by the end of its fiscal year 2028.
The layoffs are part of a broad, company-wide “fiscal 2026 plan” focused on adopting and enabling AI to boost productivity, speed up product innovation, and improve how customers interact with the company. The restructuring is a signal that HP believes AI will fundamentally reshape its workforce, a trend experts are watching closely across the tech sector.
Key areas to be impacted
The planned job reductions will not be limited to one area but will affect several teams within the company. According to CEO Enrique Lores, employees in product development, internal operations, and customer support will see positions eliminated as HP moves to adopt and enable AI across the organization.
HP expects these actions will lead to significant financial benefits, estimating gross run rate savings of approximately $1 billion annually by the close of fiscal 2028. However, the restructuring process itself will incur labor and non-labor costs of about $650 million, with roughly $250 million expected in fiscal 2026, according to HP.
The current round of reductions follows a previous restructuring plan earlier this year, where the company had already laid off 1,000 to 2,000 employees.
Financial performance and future outlook
HP’s latest financial results were mixed. The company reported fiscal 2025 net revenue of $55.3 billion, a 3.2% increase from the previous year. Fourth-quarter revenue came in at $14.6 billion, beating analyst expectations.
Lores highlighted the company’s continuous growth, stating, “HP’s strategy to lead the Future of Work continues to deliver strong performance, marked by our sixth consecutive quarter of revenue growth.” He added that the focus for the next year is on “disciplined execution” to ensure plans “translate into long-term value for our shareholders.”
Despite the positive revenue momentum, profit forecasts fell short of some analyst estimates. HP anticipates its full fiscal year 2026 adjusted profit per share will be between $2.90 and $3.20. This range is slightly below the average analyst estimate of $3.33, according to data compiled by LSEG.
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Investment in AI vs cost headwinds
The aggressive push into AI is happening as HP navigates other market challenges. A global price surge for memory chips, including DRAM and NAND, is being driven by high demand for AI infrastructure in data centers.
This market dynamic is expected to increase costs for consumer electronics makers. HP expects to feel the impact of these higher prices during the second half of fiscal 2026.
Regarding this, Lores noted, “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.”
Even before the full-scale deployment of this new initiative, HP’s focus on AI has been evident in its products, with AI-enabled PCs accounting for over 30% of its shipments in the fourth quarter ending October 31.
Meanwhile, a recent deep dive on IBM’s AI-driven restructuring and layoffs traces how one major vendor is trading headcount for automation and software focus.