Another giant is laying off workers due to AI! HP plans to cut 10% of its employees by 2028.

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HP announced it will cut up to 10% of its workforce, becoming the latest tech giant to make major staff reductions in its push for an artificial intelligence strategy.

According to media reports on Wednesday, the restructuring plan is expected to affect about 4,000 to 6,000 employees, with layoffs to be completed by the end of fiscal year 2028. HP disclosed in its latest annual report that it has about 58,000 employees in total. CEO Enrique Lores said the company is leveraging AI to accelerate product and software development, and to automate customer support and internal processes.

HP expects the restructuring to incur about $650 million in related costs, with $250 million to occur within this fiscal year. But by the end of fiscal year 2028, these measures are expected to save at least $1 billion annually.

This layoff plan comes as HP faces rising costs in its personal computer business. Soaring demand for AI in data centers has driven up memory chip prices, which is expected to result in a net drag of 30 cents per share on earnings for this fiscal year.

AI Transformation Drives Large-Scale Restructuring

Lores emphasized that the restructuring plan is a core initiative for HP to adopt AI technology company-wide. “We truly believe this is a unique opportunity we cannot miss, to really transform the company sustainably and remain competitive for the next 10, 20 years,” he said.

Although some departments will see layoffs due to internal adoption of AI, HP also plans to increase investment in certain areas to further integrate the technology into its product portfolio. Lores said, “I believe every job will be affected by AI, and as a company, we need to take advantage of this.”

Cost Pressure Weighs on Performance Outlook

HP's financial outlook for this fiscal year is below market expectations. The company expects adjusted earnings per share of $2.90 to $3.20, lower than analysts’ expectations of $3.34 according to FactSet. For the first fiscal quarter, the company expects adjusted earnings per share of 73 to 81 cents, while analysts expect 78 cents.

Rising memory chip prices have become a major source of cost pressure. HP plans to partially offset these costs by raising PC prices, partnering with low-cost suppliers, and reducing memory configurations. But Lores pointed out that even with these measures, the company still expects a net drag of 30 cents per share in earnings for this fiscal year. “As you can see, this is a very significant number, and this is the net impact after all the actions we’ve already taken,” he said.

HP’s fourth-quarter performance was mixed. The company’s profit was $795 million, or 84 cents per share, lower than $906 million or 93 cents per share in the same period last year. Adjusted earnings per share were 93 cents, slightly higher than analysts’ estimates of 92 cents. Revenue increased 4.2% to $14.64 billion, surpassing analysts’ expectations of $14.5 billion. Personal Systems business revenue grew 8% to $10.35 billion, offsetting a 4% decline in Printing business. Printing business revenues were $4.27 billion.

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