HP's Strategic Overhaul: 6,000 Job Cuts and AI-Driven Transformation Reshape Company Future

HP Inc. (HPQ) is embarking on an ambitious corporate restructuring initiative called the “Fiscal 2026 Plan,” which signals a major shift in the company’s operational strategy. The tech giant revealed plans to streamline its global workforce by approximately 4,000 to 6,000 positions over the next two years, marking one of the most significant workforce reductions in recent company history.

The Drive Behind Massive Restructuring

The restructuring is fundamentally rooted in three core objectives: elevating customer satisfaction, expediting product innovation, and boosting overall operational efficiency through artificial intelligence integration. HP management believes that by embracing AI technologies and related enablement programs, the company can achieve these goals while maintaining competitive advantage in a rapidly evolving market landscape.

Financial Impact and Cost Structure

The financial implications are substantial. HP estimates the restructuring will generate approximately $1 billion in gross run-rate savings by the end of fiscal 2028. However, achieving these savings comes with upfront costs: the company expects to incur roughly $650 million in total restructuring expenses spanning labor and non-labor categories, with approximately $250 million of this burden falling in fiscal 2026 alone. The implementation timeline extends through the end of fiscal 2028, giving the company a multi-year window to execute the transformation.

Earnings Guidance and Market Expectations

Looking ahead to fiscal 2026, HP provided nuanced earnings guidance for investors. For the first quarter, the company projects net earnings per share between $0.58 to $0.66, with non-GAAP adjusted earnings per share estimated between $0.73 to $0.81. Wall Street analysts anticipate earnings of $0.78 per share for the same period, reflecting cautious optimism about near-term performance.

For the full fiscal year 2026, HP forecasts net earnings per share ranging from $2.47 to $2.77, while non-GAAP adjusted earnings per share is projected between $2.90 to $3.20. The broader analyst consensus expects annual earnings per share of $3.33, suggesting expectations exceed some of HP’s lower-end projections.

Dividend Continuity Amid Transformation

Despite the restructuring headwinds, HP maintained investor confidence by declaring a quarterly cash dividend of $0.30 per share, payable January 2, 2026, to registered shareholders as of December 11, 2025. This signals management’s belief in the long-term viability of the transformation plan.

Market Reaction and Stock Movement

The market’s initial response was decidedly negative. HPQ closed regular trading at $24.32, down $0.06 or 0.25% from the previous close. The sell-off intensified in after-hours trading, where the stock fell to $23.25 by 9:22 PM EST, representing a sharper decline of $1.07 or 4.40%. The extended trading weakness suggests investors remain concerned about the near-term execution risks and restructuring-related disruptions, even as they acknowledge the long-term strategic rationale behind the transformation initiative.