HP CFO Karen Parkhill Discusses PC Growth, AI Strategy, and Print Biz Outlook at GS Communacopia + Tech Conf 2025

Key Takeaways

TL;DR: HPQ continues to show PC strength, driven by Win 11 refresh and rapid AI PC adoption, supporting mid-single-digit Y/Y industry growth. Mgmt highlights proactive tariff mitigation (supply chain shifts, pricing), >$2B cost savings, and strict margin discipline (AI PCs: 5–10% ASP uplift). Print faces structural headwinds but is stabilized by subs/services and industrial print; margin focus remains. FCF guide ($2.6–3B FY25) reaffirmed. Further cost opps (AI integration), ongoing cap returns, and Print softness seen as temp.

1. PC Segment: Demand, Margins & AI PC Progress

• Growth Trajectory & Drivers
  • 5th straight Q of co-wide growth; 6th for PC.
  • Mid-single-digit Y/Y PC shipment growth expected thru FY25, driven by:
    • Aging installed base (esp. laptops, shorter lifespans)
    • Win 11 refresh: ~50% of base upgraded, strong enterprise uptake, more to come
    • AI PC mix: 25%+ of Q3 shipments AI PCs (vs. YE target), 50% in “couple of years”
    • “AI PCs are premium… higher price, higher margin”
• Tariffs & Pricing
  • Minimal tariff-driven demand pull-forward.
  • Proactive: supply chain optimization, cost cuts, price hikes (Print & PC)
  • Competitors face similar cost pressure; HPQ maintains price discipline
• Margins
  • Q3 PS EBIT margin: 5.4% (LT target: 5–7%)
  • Tariff impact offset; “expect continued sequential margin improvement”
  • AI PCs: 5–10% PC ASP uplift as AI mix hits 50%
  • Margin drivers: cost actions, AI PC/premium mix, pricing, cost focus
• AI PC Adoption & Use Cases
  • CIOs refreshing w/ AI PCs to “future proof”; demand ahead of workloads but “rapid app dev” at edge (Adobe, Zoom, CRWD using device NPU)
  • “AI PCs are the future… 50% of shipments in next couple years”

2. Print Segment: Softness, Margin Priorities, Growth Areas

• Trends & Headwinds
  • Print “performed as expected”; office softness from temp enterprise spend shift (AI/PC focus)
  • “Temporary… expect upgrades as back-to-office builds”
  • Home Print in structural decline; focus on profitability
• Subs & Value-Added Svcs
  • Focus on subs: Instant Ink, Instant Paper, HP+; “13mn subs globally… ramping fast”
  • Big tank printers growing share, boosting profitability
• Supplies
  • Q3 rev. -4% Y/Y (seasonally weak Q)
  • LT: “low single-digit decline” (shrinking base); offset by price hikes/discipline
• Margins & Cost Discipline
  • Print at “high end of margin range”
  • May cede share in some geos to protect margins
  • Ongoing cost opps: “AI in everything”—call centers, credit/collections, supply chain
• Growth Pockets
  • Industrial Print: ~15% of base, double-digit Y/Y & seq. growth
  • Svcs & Subs: High-margin/high-growth; “grow faster than core”
  • 3D Printing also contributing
  • Managed svcs (Print & PS): strong double-digit growth

3. Cost Structure, Tariffs, Supply Chain, FCF

• Cost Programs
  • Future-Ready Savings: $1.6B target raised twice; “on track for >$2B by YE”
  • Savings offset headwinds, fund growth; more runway via “AI embedment”