HP Inc. (NYSE: $HPQ) is an American tech company that manufactures and sells computer hardware, services, software, and solutions for various clients. Its portfolio includes 3D printing technology, printing-related products, enterprise IT solutions, personal computer systems, printers, and more.
On Wednesday, May 29, after markets closed, HP released its Q2 fiscal 2024 results to a positive market reception after topping earnings and revenue estimates.
HP Releases Q2 Results
For the second quarter of fiscal 2024, HP reported revenue of $12.8 billion, a 0.8% Y/Y decline but above estimates of $12.59 billion. It reported a non-GAAP diluted EPS of $0.82, beating estimates of $0.81.
Net cash from operations in Q2 came in at $581 billion, free cash flow at $481 million, and $7.2 billion in net debt. It returned $0.4 billion to shareholders via $0.3 billion in dividends and $0.1 billion in share buybacks.
Segment Performance
In the second quarter, the Personal Systems segment brought in $8.4 billion in revenue, a 3% Y/Y increase, with a 6% operating margin. Total units rose 7%, Consumer PS units down 1%, and Commercial PS units up 12%.
The Printing segment brought in $5.4 billion in revenue, an 8% Y/Y decline, with a 19% operating margin. Consumer Printing revenue fell 16%, while Commercial Printing revenue fell 12%. Revenue from the Supplies unit fell 5%, while total units fell 17%. Commercial and Consumer Printing units both recorded a 17% decline.
HP Issues Q3 and Fiscal 2024 Guidance
In Q3 fiscal 2024, HP expects a GAAP diluted EPS of $0.63 to $0.77 and a non-GAAP diluted EPS of $0.78 to $0.92. For fiscal 2024, it expects a GAAP diluted EPS of $2.60 to $2.90 and a non-GAAP diluted EPS of $3.30 to $3.60, above the analysts’ forecast of $3.43 at the midpoint. It expects $3.1 to $3.6 billion in free cash flow for FY24.
HP Goes All In On AI
During the earnings call, HP CEO Enrique Lores highlighted the company‘s AI efforts. He pointed to the “100 AI-enabled solutions redefining productivity and collaboration” presented during their Amplify Partner Conference held in March. He also highlighted their collaboration with NVIDIA, which will see NVIDIA integrate their pre-trained models into HP’s AI Studio set of tools.
Lores also pointed out that HP had the largest portfolio of AI PCS, and it was the first to launch the benefits of locally-run AI to devices to improve efficiency, performance, and privacy. The CEO also highlighted the company’s recent launch of the “most powerful ultra-mobile next-gen AI PCs” at the Microsoft Copilot+ PC last week.
HP (HPQ) Stock Performance
Following the revenue and earnings beat in Q2, HPQ shares soared 20.21% to $39.341 as of 12:12 PM EDT on Thursday. The stock is now up 28.86%, while over the past 52 weeks, it has gained 24.28%, in line with the SPX, which is up 24.82% in the same period.
HPQ’s trading volume rose to 8.25 million, above the average trading volume of 7.34 million. Its 52-week range is a high of $38.68 and a low of $25.22. The stock is above its 50 and 200 DMA of $29.63 and $28.96, respectively.
Analysts’ Forecast for HPQ
According to five stock analysts, HP has an overall hold rating. They forecast a wide range for the stock, with a high of $35 and a low of $25. Their average forecast of $30.40 is a 21.43% downside from the most recent price.
Should You Add HPQ To Your Portfolio in 2024?
HP has made huge investments in AI and was among the first to launch PCs with locally-run AI chips. Additionally, it has been working on numerous solutions for both personal and commercial use designed to improve efficiency for businesses and individuals. Thus far, HP has not registered meaningful returns from its efforts. However, as the year progresses, the impact of its AI solutions could begin to reflect on its results.
Consequently, some analysts believe the recent surge in HP stock could signal the beginning of the AI PC supercycle. If you are looking for a stock that could potentially let you benefit from the AI wave, HP is a great option.
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