On February 25, HP (HPQ.N) announced that, plagued by tariff challenges and escalating memory chip prices, its full-year earnings are now expected to fall at the lower end of its previously forecasted range. The company’s stock closed at $18.20 in New York and saw a roughly 7% drop in after-hours trading, with a cumulative decline of 48% over the past 12 months.
At present, as consumers upgrade to new computers to replace outdated models and gain access to cutting-edge AI capabilities, equipment manufacturers like HP are grappling with the twin headwinds of rising memory chip prices and supply shortages. HP has indicated that these memory-related challenges will persist throughout the current fiscal year and may even spill over into the next.
In response, the company is implementing a multi-pronged strategy: raising product prices, diversifying its supplier base, and redesigning certain products to reduce memory demands. Progress has already been made in certifying new suppliers. Additionally, HP unveiled a multi-year cost-cutting initiative aimed at achieving annual savings of $1 billion by 2028.