HP Inc (NYSE:HPQ) reported first quarter fiscal 2026 results that exceeded Wall Street expectations, but its shares were little changed on the report as the firm issued cautious guidance amid tariff uncertainty and industry challenges.
For Q1, the company posted net revenue of $14.44 billion, up 6.9% from the same period last year and above analyst estimates of $13.87 billion to $13.90 billion.
Adjusted, non-GAAP earnings per share came in at $0.81, exceeding the consensus estimate of $0.77.
HP’s Personal Systems segment, particularly AI-enabled PCs, saw significant growth, with unit shipments rising 12% year-over-year, well above expectations for mid-single-digit growth.
GAAP EPS was $0.58, slightly down from $0.59 a year earlier but within the company’s previously provided guidance of $0.58 to $0.66.
HP generated $383 million in net cash from operations and $175 million in free cash flow, returning $600 million to shareholders through dividends and share repurchases.
“We are pleased to report a strong first quarter, highlighted by robust growth in Personal Systems, including the continued momentum in AI PCs,” HP’s interim CEO Bruce Broussard said in a statement.
“Our performance reflects the strength of our portfolio and our disciplined execution of our Future of Work strategy, even as we navigate industry-wide headwinds.”
Looking ahead, HP issued cautious guidance for fiscal 2026. For the second quarter, the company estimates GAAP EPS of $0.52 to $0.58 and non-GAAP EPS of $0.70 to $0.76.
For the full year, HP maintains its annual guidance, projecting GAAP EPS of $2.47 to $2.77, non-GAAP EPS of $2.90 to $3.20, and free cash flow of $2.8 to $3.0 billion.
However, the company noted that it currently expects results to be at the lower end of these ranges, citing the impact of rising costs, US trade-related regulations, and ongoing industry headwinds.
Bank of America described HP’s first-quarter results as roughly in line with expectations but noted that the company is guiding full-year EPS and free cash flow toward the low end of its previously provided ranges.
The analysts highlighted that Personal Systems operating margins are now expected to fall below the long-term 5% to 7% target for the remainder of the year, while Print margins have been raised to the top end of the long-term 16% to 19% range due to pricing and cost reductions.
The firm added that management is employing several strategies to offset pressures from rising memory costs, including pricing adjustments, qualifying new memory and other component vendors, supply chain management, and building inventory.
BofA also observed that the strong growth in Personal Systems revenue during the quarter was partly due to demand pull-in ahead of pricing actions, while Print revenue was relatively stable, with operating margins near the upper end of the long-term range.
“Given slower PC unit growth, margin pressure from memory costs, and uncertainty from the leadership transition, we expect HPQ to move fiscal year 2026 guidance lower as the year progresses,” the analysts wrote.
Based on these factors, BofA reiterated an ‘Underperform’ rating on HP and lowered its price target to $16.
Shares of HP were little changed at Wednesday’s opening bell, trading hands at $18.