HP announces 6,000 job cuts in pivot to AI efficiency

Computer and printer maker HP has announced its restructuring plan that will cut between 4,000 and 6,000 jobs globally by the end of its fiscal year 2028. The move is central to a new company-wide initiative focused on leveraging Artificial Intelligence (AI) to enhance efficiency, product development, and customer satisfaction, aiming for USD 1 billion in gross run rate cost savings over three years.

HP CEO Enrique Lores announced the restructuring alongside the company's fiscal 2025 financial results. The reduction in the global headcount, which represents roughly 10% of the company's workforce of about 58,000 employees as of October 2024, stems directly from the company’s decision to embed AI across its core operations.

Lores explained that early AI pilots demonstrated the need to fundamentally redesign existing processes, and by implementing AI, particularly "agentic AI" that can act with minimal human intervention, HP expects to drive significant productivity gains.

The job cuts will affect teams focused on product development, internal operations, and customer support. The company projects the initiative will yield approximately USD 1 billion in gross run rate cost savings by fiscal 2028.

The company also anticipates incurring about USD  650 million in related restructuring and other charges, with approximately USD 250 million hitting in fiscal 2026.

This is not the first workforce reduction for the company; HP previously laid off 1,000 to 2,000 employees earlier in 2025 as part of a separate, ongoing restructuring plan.

Navigating industry headwinds

The workforce reduction plan comes as HP faces two major market pressures: a strategic need to embrace AI and rising component costs.

1. HP is contending with a global surge in memory chip prices (DRAM and NAND), driven by massive demand from companies building AI infrastructure. These chips are essential components for PCs. Lores stated that memory costs make up 15% to 18% of a typical PC's cost. HP expects these rising prices to impact profit margins in the second half of fiscal 2026.

2. HP's adjusted profit per share forecast for fiscal 2026, projected to be between USD 2.90 and USD 3.20, fell short of average expectations. This forecast reflects the added expense from higher component costs and U.S. trade-related regulations.

To mitigate these cost increases, the company is seen implementing aggressive measures, including qualifying lower-cost suppliers, reducing memory configurations in some products, and raising prices where necessary.

The Wider AI Trend

HP's strategy reflects a broader trend across the technology sector where major corporations are heavily investing in AI capabilities while simultaneously restructuring their workforces to optimise costs. Teams involved in customer support, internal data processes, and certain development roles are becoming targets for automation across the industry.

HP noted the rising popularity of its own AI-enabled devices, which accounted for over 30% of its PC shipments in the fourth quarter ending October 31, suggesting the company sees AI not only as a cost-cutting tool but as a key driver for future product innovation and growth.