HP is set to eliminate between 4,000 and 6,000 positions globally over the next three years as part of a comprehensive organizational transformation centered on artificial intelligence adoption. The California-based technology company views AI integration as essential for maintaining competitiveness in evolving markets.
Chief Executive Enrique Lores emphasized that embedding AI across the organization will create opportunities to accelerate product innovation, improve customer satisfaction, and boost productivity. The technology will be particularly impactful in product development, internal operations, and customer support functions. Once fully implemented by October 2028, the restructuring is projected to deliver $1 billion in annual savings, offsetting the estimated $650 million required for implementation.
The workforce reduction represents the latest phase in HP’s ongoing transformation. The company had already cut between 1,000 and 2,000 staff in February as part of earlier restructuring efforts. These changes reflect broader industry trends, as numerous major corporations have recently announced workforce reductions while citing AI adoption as a key factor. Some organizations report replacing departing employees with technology rather than new hires, suggesting fundamental changes in how businesses approach staffing.
HP’s financial outlook reflects significant industry challenges. The company provided earnings guidance for the upcoming year that fell below analyst expectations, forecasting adjusted net earnings per share between $2.90 and $3.20 versus the anticipated $3.33. Contributing to this cautious outlook are increasing costs from trade tariffs and rapidly escalating memory chip prices.
Memory components have become a particular concern for PC manufacturers. These chips now account for 15% to 18% of typical computer costs, with prices rising faster than anticipated in recent weeks. The surge is driven by intense competition for components needed to build AI datacenter infrastructure, as cloud providers purchase large quantities to meet computing demands from companies developing advanced AI models. Despite these challenges, HP reported better-than-expected fourth-quarter revenues of $14.6 billion and strong demand for AI-enabled PCs, which represented over 30% of shipments. However, shares fell as much as 6% following the workforce reduction announcement.