Technology giant HP has announced significant workforce reductions, planning to cut between 4,000 and 6,000 jobs globally by the end of fiscal year 2028. This strategic move is driven by the company's accelerated adoption of artificial intelligence (AI) to enhance efficiency, innovation, and customer satisfaction. The restructuring is expected to yield substantial cost savings, with HP aiming to save approximately $1 billion through these changes.
Key Takeaways
- HP to eliminate 4,000 to 6,000 jobs by fiscal 2028.
- The job cuts are directly linked to the integration of AI technologies.
- The company anticipates saving around $1 billion annually by 2028.
- Restructuring costs are estimated at $650 million, with a portion impacting fiscal 2026.
- AI is being embedded across HP's operations to drive transformation.
AI-Driven Restructuring
HP's decision to reduce its corporate headcount is a direct consequence of its strategic pivot towards AI. The company has been exploring AI's potential for the past two years, focusing on redesigning processes to leverage generative AI for significant impact. CEO Enrique Lores stated that the goal is to embed AI into "everything we do" to transform the company and achieve greater productivity.
Financial Implications and Outlook
The restructuring initiative is projected to generate approximately $1 billion in gross run rate savings over three years, with an estimated $650 million in related costs, including $250 million expected in fiscal year 2026. While HP beat revenue expectations in its fourth quarter, its non-GAAP diluted earnings per share forecast for 2026 fell short of analyst projections. Following the announcement, HP's stock experienced a decline in after-hours trading.
Broader Industry Trend
HP's job cuts align with a wider trend in the technology sector, where numerous companies, including Amazon and Workday, have recently announced significant layoffs attributed to AI advancements. Industry analysts note that AI automation is particularly impacting roles in customer support, content moderation, data entry, and certain programming tasks, prompting a reallocation of resources towards AI initiatives.