A Look At HP (HPQ) Valuation As AI PC Ambitions Meet Ongoing Demand And Cost Uncertainty
HP (HPQ) is back in focus after management flagged potential pressure on PC pricing and profitability in late 2026, linked to higher memory chip costs and broader inflation tied to AI data centre build outs.
See our latest analysis for HP.
Short term, the 30 day share price return of 14.63% decline and the 90 day share price return of 16.69% decline suggest pressure is building, while the 1 year total shareholder return of 31.79% decline points to a weaker longer term trend.
If HP's update has you rethinking where AI hardware fits in your portfolio, this could be a good moment to look at other high growth tech and AI stocks that may fit your thesis.
HP now trades at US$22.12, with an indicated 51% intrinsic discount and a 17% gap to the average analyst target. After a multi year run of weak total returns, is this a reset level, or is the market already pricing in future growth?
Most Popular Narrative: 14.5% Undervalued
Against HP's last close at US$22.12, the most followed narrative points to a higher fair value, built on modest growth and steady margins.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.6x on those 2028 earnings, up from 10.3x today. This future PE is lower than the current PE for the US Tech industry at 24.3x.
Curious what sits behind that required P/E shift? Revenue inches forward, margins edge higher, and earnings climb to a new level. Want the full playbook driving that US$25.88 fair value?
The narrative applies a 9.58% discount rate to HP's projected cash flows and earnings path, blending low single digit revenue growth with a small margin uplift and a lower future P/E than many tech peers to arrive at an estimated fair value of US$25.88 per share.
Result: Fair Value of $25.88 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this depends on HP offsetting pressure from structurally weak printing demand and higher memory costs, which analysts flag as a drag on margins into 2026.
Find out about the key risks to this HP narrative.
Build Your Own HP Narrative
If you see the numbers differently or simply want to stress test your own view, you can build a full HP thesis in just a few minutes by starting with Do it your way.
A great starting point for your HP research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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