HP Inc. (NYSE: HPQ) saw its shares decline approximately 4% on Monday after the company refrained from issuing financial guidance for fiscal 2027 and signaled that global personal computer unit volumes could contract next year. The cautious outlook, disclosed in a regulatory filing, reflects ongoing uncertainty in the PC market and rising input costs.
PC market contraction expected
In the filing with the U.S. Securities and Exchange Commission, HP stated that it remains in its planning period for fiscal 2027 and is not yet providing specific financial guidance. The company noted that its preliminary planning assumption, based on current third-party industry forecasts, is that industry-wide PC unit volumes will decline by roughly mid-single-digit percentage terms in calendar 2027 compared with 2026.
HP emphasized that this assumption is contingent on market performance during the second half of calendar 2026 and remains subject to change. The company did not offer a specific forecast for its own shipments or revenue, but the warning adds to concerns about the PC industry's near-term trajectory.
Guidance withheld amid uncertainty
HP clarified that Monday's disclosure should not be interpreted as formal financial guidance for fiscal 2027. The company said it is still in its planning phase and that changes in market conditions during the remainder of calendar 2026 could affect its assessment of the PC market.
The disclosure follows HP's fiscal third-quarter earnings report on August 26, during which management said it was premature to provide specific expectations for fiscal 2027, including PC unit volumes. At that time, HP reported results that topped analyst estimates and raised its outlook for adjusted earnings per share and free cash flow.
Personal Systems segment shows mixed results
In the fiscal third quarter, HP's Personal Systems revenue increased 18% year over year to $11.8 billion, despite total unit volumes declining 16%. The segment posted an operating margin of 4.6%. Adjusted earnings per share came in at $0.83, which included a $0.11 benefit from tariff refunds.
CFO Karen Parkhill noted that the earlier benefit from lower-cost inventory was "largely behind us," with higher-cost inventory now moving through the profit and loss statement. This suggests margin pressure could persist as input costs continue to rise, albeit at a slower pace.
Analyst concerns persist
Morgan Stanley has maintained an Underweight rating on HP, citing concerns about the company's unit and margin challenges. The firm argued that HP's PC margin divergence from peers makes its recent re-rating increasingly difficult to justify and identified HPQ as its top enterprise Underweight. Morgan Stanley raised its price target to $19 from $17 following the fiscal third-quarter results.
Analyst Erik Woodring previously warned that PC unit declines of more than 10% in fiscal 2027, combined with continued pressure in HP's printing business, could outweigh potential benefits from AI-enabled PCs. The company has been raising prices, shifting toward premium products, and pursuing product redesigns and cost actions to offset cost pressures.
Parkhill said HP aims to return Personal Systems operating margins to its long-term range "as quickly as possible" in fiscal 2027, but the path remains challenging given the expected market contraction.
Investors are also keeping an eye on broader tech trends, such as memory chip pricing pressures and AI-driven software outlook shifts, which could influence PC demand and component costs.
This article is for informational purposes only and does not constitute financial advice.
