Earnings Recap — Q3 FY2026
CY Q3 2026 · Reported August 26, 2026 · Beat 4 of last 6 quarters
HP Inc. reported Q3 FY2026 revenue of $15.68B, a beat of 8.6% against consensus, and EPS of $0.83, a beat of 25.0%.
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HP's results underscore the accelerating shift of AI workloads to the edge, with AI PCs now 46% of PS mix and management citing customer demand for local AI to control token costs, latency, and data governance. This supports the thesis that the AI infrastructure buildout is expanding beyond the data center to endpoint and edge devices, creating incremental demand for higher-spec PCs, workstations, and local inferencing platforms. HP's ability to pass through memory cost increases and grow revenue despite unit declines signals pricing power in the premium PC segment, which could benefit the broader edge AI hardware ecosystem.
HP delivered record Q3 revenue of $15.7 billion, up 13% YoY, with Personal Systems up 18% to $11.8 billion and Print down 2%. Non-GAAP EPS was $0.83, up 11%, including $0.11 of tariff refunds; ex-refunds, EPS still beat guidance. Key growth areas grew 46% YoY, with AI PCs at 46% of PS mix, and the company gained share in premium PCs and workstations. Free cash flow was ~$1.6 billion in the quarter, and the company returned ~$600 million to shareholders. Management also highlighted continued momentum in edge AI, with new products like the HP ZGX Fury and OmniBook Ultra 6 team, and a $100 million, 3-year strategic agreement with RRD in Print.
Management raised FY26 non-GAAP EPS guidance to $3.19-$3.29 (from $2.90-$3.10), including $0.19 of estimated tariff refunds, and raised FY26 free cash flow guidance to $3.0-$3.2 billion. For Q4, they expect EPS of $0.69-$0.79 (including $0.08 tariff refund benefit) and PS revenue to be down sequentially but still up year-over-year, with PS operating margin expected to be the trough in Q4 before improving sequentially into FY27. They reiterated that memory/storage costs will continue to rise but at a slower rate, and they expect to bring PS operating margin back to the long-term range as quickly as possible in FY27. In Print, for Q4 they expect revenue to be in line with historical seasonality and, excluding tariff refunds, operating margins in the lower half of the long-term range. Management emphasized continued focus on AI PCs, premium mix, attach growth, and disciplined pricing/cost actions to offset input cost headwinds.
“We believe the future of AI is hybrid. That means AI will operate both in the cloud and increasingly at the edge. For customers already seeing the cost of cloud-based AI add up, the economics alone makes Edge AI compelling.”
on Edge AI strategy
“We continue to expect memory and storage costs to increase further as a percentage of the bill of materials. And as we signaled last quarter, we expect our Q4 margin to be below Q3 levels and then to sequentially improve as we look ahead into FY '27.”
on Margin outlook
“We are maintaining our discipline to prioritizing profitable growth and edge AI-driven demand rather than chasing low-margin share.”
on Pricing discipline
Can you spend a little time on the Personal Systems assumptions for Q4? Do you see the fiscal Q4 trend line of units down high teens but revenue still growing persisting through fiscal '27?
Karen Parkhill: Q4 outlook reflects industry view of PC units declining high teens in 2H as pricing pressures demand, but we still expect YoY revenue growth with richer mix of premium, commercial, AI PCs, workstations, and attach. Too early for FY27 guidance.
Is the lower-cost memory inventory benefit done? And are you caught up on pricing or should we expect more pricing upside?
Karen Parkhill: The benefit of lower-cost inventory is largely behind us; higher-cost inventory is now flowing through. We continue to increase pricing as input costs rise, using it as a last lever after demand shaping and cost actions. Ketan Patel added that pricing lags vary by go-to-market channel, from immediate to a few months.
What are the offsets that allow Personal Systems operating margins to improve in FY27 despite unit declines and component inflation?
Karen Parkhill: Costs are expected to rise at a slower rate, mitigation actions like long-term contract revisions and product redesign are kicking in, and we'll continue to drive mix toward premium products, AI PCs, workstations, and attach offerings. These combined give high confidence in improvement.