The call came on a Wednesday afternoon, and the interim chief executive led with the word that has become HP’s most important sales pitch: AI. Bruce Broussard, who is running HP while the board searches for a permanent chief executive, told investors the company’s fiscal second quarter showed strong results, with revenue growth across PCs, workstations, and print, all of it tied to what HP calls the future of work — intelligent devices, edge AI, and connected experiences.
The numbers backed him up. HP reported net revenue of $14.408 billion for the quarter ended April 30, up 9.0% from a year earlier, and net earnings of $450 million, up 10.84% from $406 million. Diluted earnings per share came in at $0.49, up 16.7%. Gross profit rose 10.11% to $3.016 billion, lifting gross margin to 20.93%, about 21 basis points higher than a year ago.
The story beneath the headline numbers is the PC market’s slow return to growth and the AI PC’s role in it. After two years of inventory digestion, corporate buyers are refreshing fleets, and the newest laptops and desktops carry neural processing units that run AI features locally — real-time translation, background noise removal, AI-enhanced video calls. HP has positioned its OmniBook and EliteBook lines around those features, and its Z workstations target engineers and researchers running local AI models. The quarter also brought HP IQ, an AI assistant for consumers, and AI-powered print features.
Not everything beat expectations. GAAP diluted EPS of $0.49 came in below HP’s own guidance of $0.52 to $0.58, pulled down by restructuring charges of $365 million and rising commodity costs that Broussard said the company is navigating. The non-GAAP picture was brighter: non-GAAP diluted EPS of $0.86 topped guidance of $0.70 to $0.76 and rose 21.1% year over year. The gap between the two measures — restructuring, acquisition charges, amortization — is the usual HP pattern, but this quarter the spread was wider than investors had expected.
Cash generation held up. Operating cash flow was $926 million, and free cash flow came to $800 million. HP returned $374 million to shareholders, including $274 million in dividends — the $0.30 per share quarterly payment — and $100 million to buy back about 5.2 million shares in the open market. It ended the quarter with $3.7 billion in gross cash.
The balance sheet shows the strain of a hardware business preparing for an upgrade cycle. Inventory of $9.2 billion was up five days quarter over quarter to 73 days, and accounts receivable rose five days to 38 days. Accounts payable stretched to 151 days, up ten days, a working-capital tool HP has used before. Chief Financial Officer Karen Parkhill struck a confident note: “With two solid quarters behind us, we are executing with discipline in a dynamic environment and are strengthening our outlook for the fiscal year to reflect this.”
Management raised its outlook. HP now expects GAAP diluted EPS of $2.15 to $2.45 and non-GAAP diluted EPS of $2.90 to $3.10 for fiscal 2026, with free cash flow of $2.8 billion to $3.0 billion. For the third quarter, it guided GAAP EPS of $0.47 to $0.63 and non-GAAP EPS of $0.61 to $0.71.
The guidance suggests HP believes the AI-driven refresh has legs. Analysts noted that PC shipments grew in the mid-single digits in the first quarter, the strongest pace since the pandemic era, and that AI-capable machines carry higher average selling prices. The industry’s hope is that the combination of a Windows refresh cycle, a wave of corporate upgrades, and genuinely useful on-device AI features will finally break the pattern of falling volumes that has dogged PC makers since 2022. HP’s personal systems business, which accounts for the bulk of revenue, has been the company’s growth engine through the recovery.
The CEO question still hangs over the stock. Broussard, a former health-care executive who joined HP’s board in 2020, has said little publicly about whether he wants the permanent job, and analysts said the uncertainty weighs on a stock trading at a modest multiple despite the improving numbers. Investors are also watching how HP navigates rising component costs, particularly DRAM and NAND pricing, which suppliers have pushed up on AI-driven demand. HP’s procurement scale and long-term supply contracts blunt some of that pressure, but the commodity cycle is the oldest risk in the PC business.
The quarter offered a clean summary of HP’s position: revenue growth is back, cash flow is solid, and AI is giving the company a story to tell. The margin math shows the gap: GAAP EPS below guidance even as non-GAAP EPS beat, the restructuring bill still coming due. For a company mid-transition, that gap is the cost of the bet. HP is spending to reposition itself around AI, and so far, the market is paying for the results. The question is whether the discipline Parkhill promised can survive a year of rising memory prices and an unresolved CEO search.
