HP Inc.'s Q3 Earnings: Navigating Post-Pandemic PC Market Dynamics

HP Inc. (HPQ) delivered mixed results in Q3 2025, with a 3.1% year-over-year revenue increase to $13.9 billion, driven by strong performance in its Personal Systems segment [1]. However, the Printing segment declined by 4%, underscoring ongoing challenges in hardware demand. This performance reflects broader industry trends as the post-pandemic PC market evolves, with HP leveraging strategic initiatives to position itself for long-term growth.

Post-Pandemic PC Market: A Tale of Two Segments

The global PC market is rebounding, with Q2 2025 shipments rising 4.4% year-over-year to 63 million units, fueled by enterprise and education demand [4]. HP’s Personal Systems segment capitalized on this trend, reporting a 6% revenue increase to $9.9 billion, driven by commercial PC sales and AI-ready hardware adoption [3]. This aligns with the industry’s shift toward AI integration, with HP embedding AI into 44% of its notebook shipments—a move expected to capture a share of the $100 billion AI PC market by 2030 [4].

Conversely, the Printing segment faced headwinds, with revenue falling to $4.0 billion. This decline mirrors broader market saturation and shifting consumer preferences toward digital workflows. Yet, HP’s focus on sustainability—such as achieving 100% renewable electricity in U.S. operations—positions it to align with evolving corporate ESG goals [2].

Strategic Resilience: Supply Chains and Shareholder Returns

HP’s supply chain diversification is a critical pillar of its strategy. By relocating nearly all North American PC production outside China by mid-2025, the company mitigates U.S. tariff risks and enhances resilience [5]. This rebalancing, combined with $1.5 billion in free cash flow, enabled $422 million in shareholder returns via dividends and buybacks [1]. Such actions signal confidence in the company’s ability to navigate macroeconomic volatility while rewarding investors.

Challenges and Opportunities

While HP’s GAAP diluted EPS rose 23.1% to $0.80, non-GAAP EPS dipped 10.7% to $0.75, reflecting the Printing segment’s drag and higher R&D costs for AI integration [1]. However, the company’s acquisition of Humane’s AI platform and its focus on localized AI capabilities in enterprise PCs suggest a long-term play to differentiate its offerings [3].

Macroeconomic factors, such as digital transformation and supply chain resilience, further underscore HP’s strategic alignment with industry needs. The digital economy’s role in driving economic growth—through industrial upgrades and green technologies—positions HP to benefit from global sustainability efforts [1].

Long-Term Momentum: A Calculated Path Forward

HP’s Q4 guidance of $0.87–$0.97 in non-GAAP EPS, aligned with historical seasonality, indicates cautious optimism [1]. The company’s dual focus on AI innovation and supply chain agility—coupled with its 20.2% global PC market share—suggests it is well-positioned to capitalize on the post-pandemic recovery [4].

For investors, HP’s ability to balance near-term challenges with long-term innovation will be key. The integration of AI into hardware, combined with its sustainability initiatives, offers a compelling narrative for growth in a market increasingly defined by technological and environmental priorities.

Source:
[1] HP Inc. Reports Fiscal 2025 Third Quarter Results [https://www.hp.com/us-en/newsroom/press-releases/2025/hp-inc-reports-fiscal-2025-third-quarter-results.html]
[2] Driving the Future of Work Through Sustainability and Innovation [https://www.hp.com/us-en/newsroom/blogs/2025/driving-the-future-of-work-through-sustainability-and-innovation.html]
[3] HP's Personal Systems: A Strategic Play in the Post-Pandemic PC Market [https://www.ainvest.com/news/hp-personal-systems-strategic-play-post-pandemic-pc-market-2508/]
[4] Gartner Says Worldwide PC Shipments Increased 4.4% in Second Quarter of 2025 [https://www.gartner.com/en/newsroom/press-releases/2025-07-14-gartner-says-worldwide-pc-shipments-increased-4-point-4-percent-in-second-quarter-of-2025]
[5] HP Q2 FY2025 Earnings: PC Growth, Supply Chain Rebalancing Amid Tariff Headwinds [https://futurumgroup.com/insights/hp-q2-fy2025-earnings-healthy-pc-growth-and-swift-supply-chain-rebalancing-amid-tariff-headwinds/]