Printers are disappearing, few people are buying computers, and HP’s stock has lost a third of its value over the past year. Yet the company pays one of the highest dividends in the sector and is attracting investors with its pivot toward AI.
The Company the World Has Stopped Printing
There are companies the market simply doesn’t like. Not because they’re failing—but because they make money from things that are slowly becoming a thing of the past. HP Inc. $HPQ is exactly such a case.
Most people know HP as a manufacturer of printers and laptops.But fewer and fewer households are buying printers these days, and things aren’t much better with laptops—the market has calmed down after the COVID boom, and HP faces pressure from Lenovo and cheaper Asian manufacturers. The result? Since last summer, the stock has plummeted from a high of around $29 to today’s roughly $19–20, its lowest level in the past 12 months.
And yet, HP is starting to be talked about as an interesting value pick. Why?
The Numbers Speak for Themselves
Let’s start with the positive. In fiscal year 2025 (which ends in October for HP), the company reported revenue of $55.3 billion—a 3.2% increase year-over-year. It’s not exactly rocket-fueled growth, but after years of stagnation, it’s a sign that the decline has stopped.
Even more interesting were the results for the first quarter of fiscal year 2026: revenue reached $14.4 billion, up 6.9% from a year ago, and earnings per share of $0.81 beat analyst estimates. The results were therefore a positive surprise.
Key valuation metrics:
P/E ratio: approximately 9
Dividend yield: around 6% per year
Dividend payout ratio: 43.8%
Free cash flow: $2.9 billion for fiscal year 2025
Management itself has admitted that, due to rising costs for memory components, it expects results to be closer to the lower end of the full-year forecast. And analysts are cautious—the consensus of 17 analysts is “Hold” with an average 12-month target of around $22–23, which is actually below the current price.
Restructuring: 6,000 layoffs and a bet on AI
In the fall of 2025, HP launched a major restructuring plan. The company announced the layoff of up to 6,000 employees and a shift in investments toward artificial intelligence. Their goal is to save $1 billion in annual costs by the end of fiscal year 2028.
Behind the entire transformation is a bet on so-called AI PCs—computers equipped with special chips for local processing of AI tasks. CEO Enrique Lores said during the earnings announcement that the company had seen “momentum in key growth areas, including AI PCs.” HP aims to be a leader in this segment and capitalize on the expected wave of corporate IT equipment upgrades, which are expected to be driven by Windows 11 and the transition to new platforms.
At the same time, the company is shifting production for the North American market by the end of 2026—more than 90% of products sold in the U.S. will be manufactured outside of China.This is a response to trade tariffs, which have cost HP hundreds of millions of dollars in previous years.
"We remain confident in our strategy and are focused on creating long-term value for customers and shareholders."
Enrique Lores, CEO of HP Inc., February 2026
Printers: a profit engine that is slowly aging
The printing segment accounts for only a third of HP’s revenue, but it is the main driver of profitability —an operating margin of over 19% is nearly four times higher than that of personal computers. The business model here has been tried and tested over the years: printers are sold at a small profit or even at a loss; the real money lies in ink cartridges and consumables.
But the trend is relentless. The digitization of the office environment is reducing print volumes, and on top of that, the share of compatible third-party cartridges—which are half the price of HP originals— is growing. The company knows this and is gradually shifting its focus to commercial and industrial printing with higher added value—where margins are higher and customers are more loyal.
"HP is facing a structural decline in the printing segment, but the commercial part of the business model is more resilient than the market recognizes. A dividend yield above 5% is attractive if the company maintains free cash flow."
Wells Fargo Analyst
Is it a value trap or a real opportunity?
A low P/E ratio and high dividend yield can signal either undervaluation or a warning of further problems. With HP, it’s more complicated.
On the one hand: the company is indeed generating solid cash flow, is disciplined in returning money to shareholders, and is entering the AI PC segment at a time when corporate customers are just beginning to replace their outdated equipment. Good timing of the restructuring could bring significant margin improvements within two years.
On the other hand: a consensus among analysts with a target price below the current market level is rare and signals that a “cheap” stock may not automatically be a good investment. The printing segment will not halt its structural decline, memory chips are becoming more expensive, and competition in the PC segment is ruthless.