HP is preparing one of its biggest restructuring drives in years. The computer and printer giant has announced plans to cut 4,000 to 6,000 jobs globally by fiscal 2028 as part of a broader cost-cutting program aimed at making the company leaner and more competitive in the age of artificial intelligence. The move, which CEO Enrique Lores describes as a “necessary step to remain competitive,” will reshape the company’s operations and further integrate AI tools into product development, customer support and manufacturing. However, investors were less enthusiastic, with HP shares falling 5.5 percent in extended trading after the announcement.

Here’s the whole story, broken down into five key points.

HP bets on AI to increase efficiency and savings

Under the new plan, HP expects to save $1 billion annually by 2028, primarily by using artificial intelligence to automate and optimize many parts of its business. “This is something we have to do to make sure the company remains competitive,” Lores told Bloomberg.

AI tools will be deployed in product design, sales, customer service and manufacturing with the goal of accelerating innovation while improving customer experience and productivity. Lores emphasized that the company’s restructuring is not simply a response to market conditions, but part of a long-term plan to future-proof HP against technological disruption.

These 3 teams will be affected by layoffs!

Lores confirmed in a media briefing that the layoffs will affect teams involved in product development, internal operations and customer support. “We expect this initiative to generate $1 billion in gross run rate savings over three years,” he said.

This is not the first time that HP has cut its workforce. Earlier this year, the company laid off an additional 1,000 to 2,000 employees as part of an earlier cost-cutting plan. However, the new cuts represent a more aggressive push toward automation and efficiency.

Demand for AI-powered PCs continues to grow

Despite the job losses, HP is optimistic about growth in its AI PC segment, where demand continues to grow. The company revealed that AI-enabled laptops accounted for more than 30 percent of total shipments in the fourth quarter ended October 31.

These next-generation PCs are expected to become a major revenue driver as businesses and consumers look for devices capable of running on-device AI models for productivity and creativity.

Memory chip costs may reduce profits

Even as HP relies on AI to cut costs, it faces new financial challenges from rising component prices. Morgan Stanley analysts warn that a global surge in memory chip prices driven by demand for AI infrastructure could put pressure on the profit margins of PC makers like HP, Dell and Acer.

Dynamic random-access memory (DRAM) and NAND chips, essential for both PCs and servers, are becoming more expensive as Big Tech companies race to expand their data center capacity. Lores acknowledged that HP expects to feel this impact until the second half of fiscal 2026, although the company currently has enough stock for short-term management.

“We are taking a prudent approach to our guide for the second half, while also implementing aggressive actions such as qualifying low-cost suppliers, reducing memory configurations and taking price action,” Lores said.

Poor outlook for profits

HP’s cautious stance is reflected in its financial forecast. The company expects adjusted profit per share in fiscal 2026 to be between $2.90 and $3.20, according to LSEG data, below analysts’ average estimate of $3.33. For the upcoming first quarter, HP projects adjusted earnings between 73 and 81 cents per share, again slightly below market expectations.

The job cuts add HP to a growing list of tech giants restructuring their operations to embrace AI. According to recent data, Amazon has recently confirmed more than 14,000 layoffs, about 40 percent of which include engineering roles, while Apple has announced smaller-scale job cuts within its sales teams as part of an effort to “improve the way we engage with customers.”

As AI reshapes the corporate landscape, HP’s decision highlights both the promise and pain of technological change. The company is betting that automation will increase innovation and efficiency, even if thousands of workers will lose their jobs in the process.