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Summary of HP (NYSE:HPQ) 2026 Conference Call Company Overview - **Company**: HP Inc. (HPQ) - **Event**: 2026 Morgan Stanley TMT Conference - **Date**: March 02, 2026 Key Points Financial Performance - **Q1 Performance**: Achieved 7% revenue growth and EPS at the high end of guidance range [7] - **Market Share**: Gained share in key areas such as Personal Systems (PS), high-value segments, and consumer markets [7] - **Print Segment**: Increased share in Big Tank and developed markets, with a focus on supplies [7] Outlook and Guidance - **Revenue Growth**: Expected to moderate in the second half of the year due to supply chain challenges, particularly in memory [8] - **Earnings Per Share (EPS)**: Anticipated to be at the lower end of the annual range due to current market conditions [9] - **Memory Supply**: Addressing supply challenges through a strong mitigation playbook, including securing supply and increasing prices [12] CEO Transition - **Interim CEO**: Bruce Broussard is providing continuity and stability during the CEO search [13] - **Search Criteria**: The board is looking for a leader with experience in managing large global businesses [14] Memory Supply Challenges - **Supply Relationships**: Long-term relationships with major suppliers are being leveraged to ensure memory supply [16] - **Cost Impact**: Memory costs are expected to double sequentially, impacting pricing strategies [18] Personal Systems Business - **Revenue Growth Expectation**: Mid-single digit revenue growth anticipated, despite expected unit declines [19] - **Market Trends**: Industry experts predict a high single-digit to low-teens decline in units for the calendar year [21] - **AI PCs**: 35% of shipments were AI PCs, indicating a growing trend in this segment [29] Print Business Insights - **Print Demand**: Stable usage patterns observed, with potential for growth as businesses return to office settings [41] - **Market Share**: HP maintains a 33.5% share in the print market, focusing on disciplined pricing strategies [47] Strategic Initiatives - **Cost Reduction**: A $1 billion AI-enabled cost savings program is in place, with $300 million expected in savings this fiscal year [68] - **Investment Focus**: Investments are aligned with driving AI PCs and enhancing print capabilities [66] Capital Allocation - **Free Cash Flow**: Emphasis on maintaining free cash flow despite market challenges, with a focus on revenue growth from share gains and pricing actions [61] - **Shareholder Returns**: HP has returned approximately $19 billion to shareholders over the last five years [86] Competitive Landscape - **Tariff Environment**: Section 301 tariffs remain a concern for the print business, but the PS business is largely exempt [84] - **Market Position**: HP is positioned strongly in both print and personal systems, with no immediate need for consolidation [72] Future Outlook - **Long-term Strategy**: Focus on AI and the future of work, with a commitment to delivering shareholder value through disciplined capital allocation [86] Additional Insights - **Peripherals Market**: A third of the PS growth margins come from non-PC related businesses, which are expected to grow and have higher margins [32] - **AI Integration**: AI is being integrated into supply chain processes to enhance efficiency and reduce costs [69]

Core Viewpoint - Dell Technologies experienced a significant stock price increase of over 21% following the announcement of strong growth in its AI-focused businesses, highlighting the transformative impact of AI on the company [1]. Financial Performance - Dell's revenue for the fiscal 2026 fourth quarter rose by 39% year over year, reaching $33.4 billion [3]. - The company's adjusted net income increased by 36% to $2.6 billion, with adjusted earnings per share rising by 45% to $3.89, aided by stock buybacks [5]. AI Business Growth - Sales of Dell's AI-optimized servers surged by 342% to $9 billion, reflecting booming demand for AI infrastructure [3]. - The company reported closing over $64 billion in AI-optimized server orders and shipping more than $25 billion throughout the year, entering fiscal 2027 with a record backlog of $43 billion [7]. Future Outlook - Dell projects full-year revenue growth of 23% to approximately $140 billion for fiscal 2027, with expectations for sales of AI-optimized servers to more than double to $50 billion [6]. - Management anticipates adjusted earnings to increase by 25% to $12.90 per share, prompting a 20% increase in the cash dividend to $2.52 [6].

Economic Outlook - BlackRock's Chief Investment Officer of Global Fixed Income, Rick Rieder, expressed optimism about the economy, citing potential tax cuts from President Trump as a means to maintain economic momentum despite concerns about the national deficit [1] - Rieder emphasized the importance of fostering a hotter economy through tax incentives and deregulation, viewing growth as a primary method to diffuse national debt [1] - He believes the Federal Reserve should cut rates to moderate levels to support a growth-oriented environment [1] Market Analysis - Rieder described the current market as fascinating yet challenging, highlighting the need for humility among investors as industries undergo rapid reevaluations [2] - He predicts the economy will grow above 5% nominal this year, with solid earnings growth expected [2] - A significant technical condition noted is the reliance on stock buybacks from hyperscalers, which have provided support during market pressures [2] Undervalued Stocks - A list of the 10 most undervalued stocks under $30 was provided, focusing on companies trading below a forward P/E of 15 and recently reporting noteworthy developments [3][5] - The strategy aims to identify stocks popular among analysts and elite hedge funds, with a historical performance of 427.7% since May 2014, outperforming benchmarks by 264 percentage points [6] Plains GP Holdings (NASDAQ:PAGP) - Plains GP Holdings reported a Q4 adjusted EBITDA of $738 million and a full-year total of $2.833 billion, undergoing a strategic transformation into a pure-play crude oil midstream provider [7] - The crude oil segment contributed $611 million to the final quarter's EBITDA, while the NGL segment faced seasonal volatility [8] - The company aims for $100 million in annual cost savings by 2027 and plans to invest ~$350 million in growth capital to enhance operations [9] HP Inc. (NYSE:HPQ) - HP reported a 7% year-over-year revenue increase for FQ1 2026, reaching $14.4 billion, driven by an 11% revenue jump in the Personal Systems segment [11] - The company faces rising input costs, particularly for DRAM and NAND memory, which have surged to ~35% of the PC bill of materials [12] - HP maintained its full-year guidance but expects to land at the lower end of its non-GAAP EPS range due to anticipated declines in PC unit demand [13]

Core Viewpoint - HP Inc anticipates ongoing volatility in memory chips and a significant decline in PC shipments, leading to a forecasted adjusted profit at the lower end of its previous guidance for fiscal 2026 [1][3] Group 1: Financial Performance - HP's adjusted profit for fiscal 2026 is expected to be between $2.90 and $3.20 per share, with current expectations leaning towards the lower end of this range [1] - The company's first-quarter revenue increased by 6.9% to $14.44 billion, surpassing estimates of $13.94 billion, while adjusted profit per share was 81 cents, exceeding estimates of 76 cents [6] Group 2: Market Conditions - The tech industry is facing increased costs due to a shortage of memory chips, driven by substantial AI data center expansions [2] - HP expects PC unit shipments to decline in the double digits, consistent with broader industry trends [1] Group 3: Strategic Responses - HP has implemented measures to mitigate the impact of rising memory costs, including supply chain adjustments and price increases to counteract tariffs [2] - The company is evaluating new tariff announcements but does not foresee immediate adverse effects on its business [5] Group 4: Demand Insights - Positive demand trends are noted in Europe and Asia, supported by the Windows 11 upgrade cycle, with a 16% growth in the consumer business during the first quarter [4] - AI-powered PCs accounted for over 35% of total PC shipments in the first quarter, up from 30% in the previous quarter [5]

Core Viewpoint - HP Inc. anticipates fiscal 2026 results to be at the low end of its forecasts due to U.S. trade regulations and rising memory chip costs, leading to a 3.6% decline in its shares during extended trading [1] Financial Performance - HP's first-quarter revenue increased by 6.9% to $14.44 billion, surpassing analysts' average estimate of $13.94 billion [1] - The adjusted profit per share for the quarter ended January 31 was 81 cents, exceeding estimates of 76 cents [1] - Revenue from the personal systems unit, which includes consumer and commercial PCs, grew by 11% to $10.25 billion [1] - Revenue in the printing segment fell by 2% to $4.19 billion [1] Market Outlook - HP's CFO indicated that the company expects results to be closer to the low end of its range due to increasing memory costs [1] - Preliminary data from IDC suggests a low double-digit decline in unit shipments for smartphones and personal computers in 2026 [1] - Global PC spending is projected to rise to $219.57 billion by 2027 [1] Strategic Adjustments - HP, similar to peers like Dell, has implemented supply chain adjustments and price increases to mitigate the impact of fluctuating tariffs and rising memory chip prices [1] - The company is benefiting from the growing adoption of AI-powered personal computers and the ongoing Windows 11 upgrade cycle [1]

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Market Overview - The S&P 500 and Dow Jones Industrial Average fell more than 1% as investors reacted to jobs data and awaited the January inflation report [1][15] - The Dow dropped 669.42 points (1.34%) to 49,451.98, the S&P 500 decreased by 108.71 points (1.57%) to 6,832.76, and the Nasdaq Composite lost 469.32 points (2.03%) to 22,597.15 [6][15] Technology Sector - Cisco Systems reported a less-than-impressive quarterly update, leading to a 12.3% drop in its shares, the largest one-day selloff since May 2022, which negatively impacted the broader technology sector [2][8] - The S&P 500 software index fell 1.7%, marking its second consecutive loss, with AppLovin experiencing a significant decline of 19.7% after its fourth-quarter results [9][15] - Concerns about AI disruption affected transportation companies, with the Dow Jones Transport Average sinking 4% [10][15] AI Investment and Competition - Investors are focused on which sectors can enhance productivity through AI investments while also worrying about industries that may face disruption [3][5] - Major tech companies, including Amazon, Google, Meta, and Microsoft, are expected to spend around $650 billion in the competition for AI dominance [9][15] Employment and Economic Indicators - A stronger-than-expected jobs report raised concerns that the Federal Reserve may be less likely to cut interest rates [7][15] - The number of Americans filing new unemployment claims decreased less than anticipated, indicating lingering disruptions from winter storms [7][15] Market Dynamics - Declining issues outnumbered advancers on both the NYSE and Nasdaq, with a ratio of 2.17-to-1 on the NYSE and 2.74-to-1 on the Nasdaq [12][15] - The Philadelphia SE Semiconductor index finished down 2.5%, while Equinix shares rose 10.4% due to strong AI-linked demand forecasts [11][15]

Core Insights - The personal computer market is expected to face rising DRAM and NAND/SSD prices due to supply shortages driven by AI data center demand, leading to increased selling prices by PC vendors in 2026 [2] - Apple is well-positioned with its Mac business benefiting from the new macOS Tahoe 26 and M5 chip, which enhances performance and user experience [3][4] - HP is experiencing strong early adoption of AI-enabled PCs, but faces challenges with declining PC unit volumes and rising memory costs impacting earnings in 2026 [7][8] Apple Insights - Apple's Mac business is gaining market share, with a 9% share in 2025, up 30 basis points year-over-year, and shipments growing 11.1% to 25.6 million [5] - The M5 chip, built on 3 nm technology, offers significant performance improvements, including over four times the peak GPU compute performance of the previous M4 chip [4] - Apple's diversified manufacturing base, including operations in India and Vietnam, is expected to help manage supply chain challenges in 2026 [6] HP Insights - HP's AI PCs accounted for over 30% of total shipments in Q4 2025, with expectations to rise to 40-50% in fiscal 2026, leading to higher average selling prices [7] - Despite the growth in AI PCs, HP anticipates a decline in overall PC unit volumes in fiscal 2026, with only slight revenue growth expected from higher specifications [8] - HP's market share was 20.2% in 2025, with shipments growing 8.4% year-over-year to 57.5 million [10] Earnings Estimates - The Zacks Consensus Estimate for HP's fiscal 2026 earnings is $3.00 per share, reflecting a 4% decrease from fiscal 2025 [11] - In contrast, the consensus for Apple's fiscal 2026 earnings has increased to $8.13 per share, indicating a 9% growth over fiscal 2025 [12] Stock Performance and Valuation - Over the past 12 months, Apple shares have appreciated by 10.3%, while HP shares have dropped by 40.2% [13] - HP shares are considered cheaper with a Value Score of A, trading at 0.33X forward price/sales, compared to Apple's 7.83X, which has a Value Score of F [16] Conclusion - Apple's strong Mac portfolio and technological advancements position it favorably in the PC market, while HP faces challenges from memory shortages and declining demand [19]

Group 1 - Dell Technologies (DELL.US) saw a pre-market increase of over 2%, reaching $121.75 [1] - Omdia's latest report indicates a significant recovery in the global PC market, with total shipments expected to reach 279.5 million units in 2025, a 9.2% increase from 2024 [1] - The fourth quarter of 2025 is projected to see shipments exceed 75 million units, reflecting a year-on-year growth of 10.1%, which will be a key driver for annual growth [1] Group 2 - Dell's fourth-quarter year-on-year growth rate reached 26%, setting a record for quarterly shipments [1] - The company's total annual shipments amounted to 41.89 million units, with a market share increase of 2 percentage points year-on-year [1]