HP's Q3 2025 Earnings: AI PC Adoption Accelerates Amid Print Challenges

HP Reports Solid Q3 2025 Performance

HP Inc. (NYSE: HPQ) has released its third-quarter financial results for fiscal year 2025, showcasing a fifth consecutive quarter of growth. The company reported a 3% year-over-year increase in revenue, primarily driven by strong performance in its personal systems segment 1

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Personal Systems Segment Shines

The personal systems division emerged as the star performer, with revenue growing 6% year-over-year and 10% sequentially 2

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. This growth was fueled by several factors:

1. Windows 11 refresh cycle
2. Accelerating AI PC adoption
3. Strong back-to-school season
4. Double-digit growth in advanced compute solutions and services

Notably, AI PC shipments exceeded expectations, reaching over 25% of the personal systems mix a full quarter ahead of target 1

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. Enrique Lores, HP's President and CEO, maintained the company's previous guidance of a "5% to 10% price increase driven by AIPCs compared to non-AIPC units" 2

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Print Segment Faces Headwinds

While personal systems thrived, the print segment encountered challenges:

1. Revenue declined 4% year-over-year (3% in constant currency) 2

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2. Hardware demand softened, particularly in North America and parts of Europe
3. Enterprise IT spending prioritized other areas over print 2

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4. A more aggressive pricing environment limited the effectiveness of industry-wide price increases 2

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Despite these challenges, the print segment delivered a 17.8% operating margin, flat year-over-year and within guidance 2

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Financial Highlights and Future Outlook

HP reported several key financial metrics for Q3 2025:

1. Non-GAAP operating margin of 7.8%, down year-over-year but within guidance 2

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2. Generated approximately $1.1 billion in cash from operations and $1.0 billion in free cash flow 2

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3. Returned over $400 million to shareholders via dividends and share buybacks 2

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Looking ahead to Q4 2025, HP provided the following guidance:

1. Non-GAAP diluted EPS of $0.85 to $0.95 2

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2. Personal systems operating margin expected in the 5%-7% range 2

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3. Print operating margin projected near the top of the 16%-19% range 2

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Strategic Initiatives and Cost Savings

HP continues to make progress on its strategic initiatives:

1. On track to achieve $2 billion in annualized gross run-rate savings by the end of fiscal 2025 1

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2. Nearly all products sold in North America are now built outside of China, reducing tariff exposure 1

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3. Ramping up production across Vietnam, Thailand, Mexico, and the US 1

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Sustainability and Market Share Gains

HP reported several achievements in sustainability and market share:

1. Achieved 100% renewable electricity across U.S. operations 2

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2. 99% of HP home and office printers, desktops, notebooks, displays, and workstations now incorporate recycled content 2

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3. Gained market share in premium commercial, consumer, and AIPC sub-segments 2

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4. Delivered double-digit year-over-year growth in subscriber count for "all-in" print subscription services 2

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As HP navigates the evolving tech landscape, the company's focus on AI integration, cost-saving measures, and supply chain diversification appears to be yielding positive results, particularly in the personal systems segment. However, challenges in the print market and ongoing global economic uncertainties continue to present hurdles for the tech giant.