Hewlett-Packard (HP) Gains Investment Appeal: Valuation Attractiveness and AI-Driven Momentum

Hewlett-Packard (HPQ) has emerged as a compelling investment opportunity in 2025, with its valuation metrics and accelerating business momentum aligning to create a favorable risk-reward profile. While the stock has faced volatility-dropping 26.10% over the past 52 weeks-its current valuation appears undervalued relative to industry benchmarks, and its strategic pivot toward AI-driven innovation is generating tangible growth.

Valuation Attractiveness: A Discount to Industry Averages

HP's valuation metrics suggest it is trading at a significant discount to its peers. As of October 2025, the company's trailing price-to-earnings (PE) ratio stands at 9.91, well below the computer hardware industry's average P/E of 30.76, according to StockAnalysis statistics. Its forward PE ratio of 8.22 further underscores its affordability, particularly when compared to the sector's elevated multiples. While the PEG ratio of 4.57 raises concerns about overvaluation relative to earnings growth, this metric may not fully capture the transformative potential of HP's AI initiatives.

The company's price-to-sales (P/S) ratio of 0.48 for trailing twelve months (TTM) is also strikingly low, especially against the industry's average P/S of 5.82, per the StockAnalysis data. Similarly, HP's enterprise value-to-EBITDA (EV/EBITDA) ratio of 7.27 is a fraction of the computer hardware sector's 25.45 and the broader Information Technology sector's 27.25, based on the same StockAnalysis figures. These metrics suggest HP is undervalued on a relative basis, offering investors a margin of safety while positioning for growth.

Accelerating Business Momentum: AI PCs and Strategic Innovation

HP's recent financial performance highlights its ability to capitalize on emerging trends. In Q3 2025, the company reported $13.9 billion in net revenue, a 3.1% year-over-year increase (StockAnalysis). The Personal Systems segment, which accounts for 71% of revenue, drove this growth, with $9.9 billion in sales-a 6% year-over-year rise-powered by robust demand for AI PCs. These devices now represent 25% of the Personal Systems product mix, a milestone achieved a quarter ahead of schedule, according to a Quocirca analysis.

The success of AI PCs is not merely anecdotal. HP's collaboration with software giants like Microsoft, Adobe, and Zoom has enabled the development of applications optimized for AI capabilities, enhancing user productivity, as noted by Quocirca. Internally, HP employees have already seen measurable benefits: AI PCs are saving staff an average of four hours per week, the Quocirca piece reports. Meanwhile, external demand is surging, with IDC forecasting that AI PCs will dominate 93.9% of the commercial market by 2028, according to the same Quocirca coverage.

HP's strategic initiatives extend beyond PCs. At Amplify 2025, the company announced over 60 redesigned platforms equipped with neural processing units (NPUs) and launched the AI ISV acceleration program to foster application development, as highlighted by Quocirca. Additionally, the HP Workforce Experience Platform (WXP), an AI-powered IT management system now available in 40 countries, is positioning the company to lead in the future of work, per the Quocirca analysis.

Navigating Challenges and Future Outlook

While the Printing segment reported a 4% revenue decline in Q3 2025, its 17.3% operating margin remains a critical profit driver (StockAnalysis). HP's cost-saving measures, including $2 billion in annualized gross run-rate savings by fiscal 2025, further insulate the business from macroeconomic headwinds, as noted by Quocirca. Meanwhile, Hewlett Packard Enterprise (HPE) is projected to grow 15% year-on-year in 2025, fueled by the integration of Juniper Networks and rising demand for AI and hybrid cloud solutions (StockAnalysis).

Conclusion: A Compelling Case for Investors

HP's improving investment profile is underpinned by a combination of attractive valuation metrics and a clear strategic vision. While the stock's beta of 1.30 indicates higher volatility (StockAnalysis), its alignment with AI-driven growth trends-particularly in PCs and edge computing-justifies a premium to its current valuation. For investors seeking exposure to the AI revolution with a margin of safety, HP offers a rare blend of affordability and innovation.