HP (7HP) AI Stock Analysis

Company Guidance

HP raised its fiscal‑year outlook and provided Q4 guidance: diluted non‑GAAP net EPS is now expected at $3.19–$3.29 (up from $2.90–$3.10) including an estimated $0.19 tariff‑refund benefit, Q4 EPS is guided to $0.69–$0.79 (including ~$0.08 tariff benefit), and full‑year free cash flow guidance was increased to $3.0–$3.2 billion. In Q3 the company delivered $15.7 billion of revenue (+13% YoY, +11% cc), gross margin of 18.8%, operating margin of 6.5%, and non‑GAAP EPS of $0.83 (+11%, including $0.11 of tariff refunds); Personal Systems revenue was $11.8 billion (+18% YoY) with a PS operating margin of 4.6% (units down, channel inventory higher than normal but controlled), AI PCs were ~46% of mix this quarter with a 50% target by year‑end (60–70% in 2027), and key growth areas grew 46% YoY. Print revenue was down 2% (−4% cc), Print operating margin 18.1% (tariff benefit excluded would be in line with guidance), supplies revenue down ~4% cc, tank printers grew units ~42%, cash from operations in Q3 was >$1.7B with ~ $1.6B FCF (YTD FCF >$2.5B), returned ~ $600M to shareholders in Q3 (~$1.5B YTD), paid down just over $500M of debt, and ended with a negative 37‑day cash conversion cycle; looking ahead HP expects Q4 PS units to decline high‑teens (Q4 revenue still to grow YoY but be below seasonal), Q4 margins to be the trough with improvement into FY‑27, and memory/storage/input costs to rise further but at a slower rate.