HP Inc. at Goldman Sachs Conference: AI PCs Drive Growth

On Monday, 08 September 2025, HP Inc. (NYSE:HPQ) participated in the Goldman Sachs Communicopia + Technology Conference 2025. The company reported a strong performance with its fifth consecutive quarter of growth, emphasizing strategic initiatives in AI PCs and supply chain optimization. While the PC segment showed robust expansion, HP noted temporary softness in office print demand.

Key Takeaways

• HP Inc. achieved its fifth consecutive quarter of company-wide growth and sixth in the PC segment.
• AI PCs accounted for over 25% of Q3 PC shipments, expected to reach 50% in two years.
• The company plans to return 100% of free cash flow to investors, maintaining gross leverage under two times.
• HP’s Future Ready Savings Plan aims to deliver over $2 billion in cost savings by year-end.
• Strategic investments focus on AI PCs, subscriptions, and industrial print.

Financial Results

• HP Inc. reported its fifth consecutive quarter of growth, with the PC segment leading the charge.
• Personal Systems (PS) EBIT margins returned to a long-term range of 5% to 7%.
• Free cash flow for the year is expected to be between $2.6 billion and $3 billion.

Operational Updates

• AI PCs surpassed initial expectations, comprising over 25% of Q3 shipments.
• HP projects AI PCs to constitute 50% of shipments within the next few years, boosting average selling prices by 5% to 10%.
• The Instant Ink and Instant Paper subscriptions have reached 13 million subscribers.
• To mitigate tariffs, HP is relocating manufacturing from China to Thailand, Vietnam, and Mexico.

Future Outlook

• HP anticipates mid-single-digit growth in industry PC unit shipments for the rest of the year.
• Continued sequential improvement in PS margins is expected.
• The company remains focused on M&A opportunities that align with its strategy to drive the future of work.

Q&A Highlights

• HP believes the current softness in office print demand is temporary.
• The print segment aims to grow margins over time, with industrial print showing double-digit growth.
• The acquisition of Humane and its Cosmos AI platform is enhancing HP’s device connectivity.

The full transcript of the conference call provides further insights into HP Inc.’s strategic direction and performance.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Karen Parkhill, CFO, HP Inc.: I’m going to use the bottom of the line.

Mike Yang, Analyst, Goldman Sachs: Yeah, great. Thank you, everybody. Welcome to the HP Fireside Chat at the Goldman Sachs Communicopia and Technology Conference. I have the privilege of introducing and hosting Karen Parkhill, who is the CFO of HP Inc. Karen joined HP Inc. in 2024 from Medtronic, where she had served as CFO since 2016. My name is Mike Yang, and I cover HP Inc. and IT hardware here at Goldman Sachs. We have about 35 minutes for today’s presentation. Karen, thank you so much for making yourself available to us. It’s such a privilege to have you here on stage with us.

Karen Parkhill, CFO, HP Inc.: Thank you, Mike. It’s great to be here with you.

Mike Yang, Analyst, Goldman Sachs: To start things off, maybe we can just do a brief recap. You know, HP reported earnings two weeks ago. We saw strong PC refresh demand, a little bit of softness in print. Maybe before we dig into some big picture strategic questions, you could talk about some key takeaways that you’d like to highlight from the quarter.

Karen Parkhill, CFO, HP Inc.: Sure. Thanks for that opening question. We had a really good third quarter. We delivered our fifth consecutive quarter of growth across the company and our sixth consecutive quarter of growth in our PC segment. The PC momentum has really been driven by the Windows 11 refresh and the increase of AI PC shipments across our space. We expect that momentum to continue through the end of this fiscal year and into next fiscal year. We did see in print it perform as we expected. We did see a little bit of softness in the office space, but we expect that to be temporary. Within both businesses, we performed with our margins within the ranges that we’ve given, despite the impact of increased tariffs that we’ve been rapidly working to offset.

Mike Yang, Analyst, Goldman Sachs: Great. Maybe just following up on that, you talked about continuing to expect growth in PCs. The company said that they expect mid-single-digit year-over-year growth in industry PC unit shipments for the rest of the years. Maybe you can talk a little bit about what’s driving that industry outlook and how does the macro environment take into consideration when you give that type of forecast?

Karen Parkhill, CFO, HP Inc.: Yeah, when we look at the overall PC market, we do expect that mid-single-digit growth in line with the industry experts. I’d say it’s driven by three important parameters. One, we’ve got an aging installed base that is being refreshed. With that installed base, we’ve got more and more laptops out there, and those have a shorter lifespan. That’s helping as well. Two, we’ve got the Windows 11 refresh. I’d say we’ve still got plenty of opportunity left. We’d say about 50% of the installed base out there has been refreshed, so we still have plenty of room to go. Third, we’ve seen an increasing mix of AI PCs across the shipments. We had said originally that we expected to have 25% of our shipments be AI PCs by the end of this fiscal year, and we actually saw it a little bit earlier in the third quarter.

25% of our shipments or slightly more than that in the third quarter were AI PCs. We still expect 50% of our shipments to be AI PCs within the next couple of years. With AI PCs, that brings a higher price and higher margin as well. It’s a premium product.

Mike Yang, Analyst, Goldman Sachs: Right. The AI PC penetration hitting that 25% target earlier than expected, which has been great to see. I was wondering if you could talk about whether or not the prospects and the implementation of tariffs have affected that. Did we see much in terms of demand pull forward because of the threat of tariffs, not only for the AI PC penetration, but just for the environment overall? Are there any specific customer verticals where tariffs may have had an outsized impact just in terms of demand pull forward?

Karen Parkhill, CFO, HP Inc.: Yeah.

You know, we look at all of our data and trends, to be honest, Mike, and we see very little impact of demand pull forward right now. We said that in our second quarter, and we said it the same in our third quarter. While I know that there’s been talk about demand pull forward, really our data doesn’t show it.

Mike Yang, Analyst, Goldman Sachs: Okay. HP recently took some price actions in both the PC and the print portfolio to offset higher commodity costs, some of which are related to tariffs. Could you talk a little bit about how those pricing actions have been received by the market and any areas, whether product or customer types, that are more price sensitive and how HP is exposed to some of those segments?

Karen Parkhill, CFO, HP Inc.: Yeah. Obviously, with the increased cost of tariffs, we’ve been taking very decisive action. That includes optimizing and moving around our supply chain first and foremost. It includes cost reduction everywhere that we can, and it does include increasing price. We’ve been taking decisive action across both of our segments, both print and PC, to increase price. I would say our competitors are facing the same cost pressures and dynamics. While it remains a competitive pricing environment, I do think that our customers do understand the need to increase prices. We’re seeing our discipline across those price increases and us maintaining it.

Mike Yang, Analyst, Goldman Sachs: Okay, great. Going back to one of the key drivers of PC refresh, which is the Windows 10 end of life, that’s supposed to occur next month in October. I think the company has shared that slightly over 50% of the install base has converted to Windows 11 to date. Maybe you could talk a little bit about the pace you see for the remaining roughly 50% to convert to Windows 11. How many of those customers may potentially pay for some sort of license extension so that they don’t refresh imminently? How would you see that all playing out?

Karen Parkhill, CFO, HP Inc.: Yeah, I would say the good news is that we’re at 50% and there’s more to go.

Mike Yang, Analyst, Goldman Sachs: Right.

Karen Parkhill, CFO, HP Inc.: I’d say the pace of the refresh started out slower than I think we anticipated, but we’ve seen some pickup in the last couple of quarters. Now it’s on pace, I’d say, with prior refreshes that we’ve had and seen. I’d say it’s starting more strongly with the large enterprise, but moving down, obviously, to the small and medium businesses and into the consumer. I’d say there’s more to go. That, I think, is one of the, but not only, drivers of growth momentum, not just for the end of this fiscal year, but into next.

Mike Yang, Analyst, Goldman Sachs: Right. The aging install base probably being the most important one.

Karen Parkhill, CFO, HP Inc.: Yeah.

Mike Yang, Analyst, Goldman Sachs: Of the three that you’ve mentioned.

Karen Parkhill, CFO, HP Inc.: That and AI PC pickup.

Mike Yang, Analyst, Goldman Sachs: Okay. Maybe if we could double-click on Personal Systems margin, which is the segment that houses PCs. Last quarter, PS EBIT margins of 5.4% returned to what you guys have talked about as the long-term range of 5% to 7%. How do you think about the drivers of margin improvement in the quarter, but also the key drivers of sequential improvement next?

Karen Parkhill, CFO, HP Inc.: With the impact of tariffs that hit mostly in the second quarter, we took some really decisive action to offset that impact. As expected, we drove that sequential increase in our PS margins back into our target range of 5% to 7%. We expect those actions that we’ve taken to gain further traction in this coming quarter. We expect continued sequential improvement in those margins. As we look ahead, we’re focused on maintaining those margins within the 5% to 7% range.

Mike Yang, Analyst, Goldman Sachs: That’s great. On the AI PC piece, as you mentioned, these are PCs with more content, comes with higher ASP, presumably more margins. They made up 25% of shipments last quarter. Could you maybe just talk about the magnitude of ASP or price increases you expect from AI PCs? What are really the key drivers of that?

Karen Parkhill, CFO, HP Inc.: AI PCs are premium products, and they do carry higher price and higher margin with them. We’ve said that we expect an ASP uplift to the overall PC category of 5% to 10% with AI PCs by the time we reach the 50% shipments within a couple of years. We’re on track for that, and just expect that to continue.

Mike Yang, Analyst, Goldman Sachs: Okay, great. Maybe you could talk a little bit about the demand driver for an AI PC. I think some people just wonder why anybody would need that at this point. How much in terms of software or workloads happen on device relative to in the cloud? Is this really more about future-proofing, right? If you’re an enterprise, you want to get the thing that’ll last you over the test of time, so to speak.

Karen Parkhill, CFO, HP Inc.: AI PCs are a little bit about future-proofing right now with enterprises because we see CIOs making that decision to refresh their installed base with AI PCs because they don’t want to be outdated in a year or two. I’d say, you know, more and more, we’re seeing more applications being developed that are going to be able to run at the edge. It’s faster, it’s more secure, it’s cheaper because it doesn’t require the increased cost for network and cloud. We’re seeing it today. We’ve got software from Adobe and Zoom that are running at the edge on the AI PCs. We’ve got CrowdStrike today that is using the higher NPU of AI PCs to scan the memory and be able to operate more effectively and faster for its customers.

There are examples today, and there are more and more examples that are being developed, you know, as we speak that are rapidly coming to market. AI PCs are the wave of the future, and that’s the key reason why we expect 50% of our shipments to be AI PCs in the next couple of years.

Mike Yang, Analyst, Goldman Sachs: Right. Somebody has to pay for the cost to compute. If you can put it into the device, all the better.

Karen Parkhill, CFO, HP Inc.: Yep.

Mike Yang, Analyst, Goldman Sachs: You know, shifting gears, maybe we can talk a little bit about print. HP has done a very good job of increasing the value-added services in home printing, right? I think about some of the subscription services like HP+ and Instant Ink and Instant Paper. Maybe you can elaborate a little bit on the HP home print strategy and where you see this business evolving to in the long run.

Karen Parkhill, CFO, HP Inc.: Obviously, the home print business has been declining a bit. We’ve been focused on operating it the most effectively and most profitably that we can. We’ve been focused on increasing the amount of big tank printers that we sell as part of our mix, and we expect that to continue. We’ve been focused on increasing our subscription base. We’ve got Instant Ink, Instant Paper, all-in subscription, and we have 13 million subscribers globally right now. It’s ramping at a rapid pace. We’ve also been focused on increasing pricing to offset the costs that we’ve seen, particularly in tariffs. Of course, we’re reducing costs everywhere that we can across our print business.

Mike Yang, Analyst, Goldman Sachs: Great. Maybe going back to some of our earlier discussion points around office print, some of the softness you may have seen in the quarter. If I recall correctly, it was some of the enterprise customers that may have deprioritized some of the print investments because of things like PC refresh, investing in AI. When does HP expect commercial demand and print to stabilize and improve? Do you see the risk of potentially investments in enterprise print being crowded out by some of these things for some foreseeable time?

Karen Parkhill, CFO, HP Inc.: Yeah, thanks, Mike. I would say, you know, while we did see a slight decrease in office demand this past quarter, we do believe that’s temporary.

Mike Yang, Analyst, Goldman Sachs: Okay.

Karen Parkhill, CFO, HP Inc.: We did see companies, particularly larger enterprises, choosing to prioritize other investments over print right now. We don’t expect that to be something that’s long-lived. In fact, when we look at our usage data across print, it’s very stable. People are using the print services. We expect that to continue. Eventually, you’re going to need to refresh your installed base of printers. As we look at the back-to-office momentum that is continuing around the world, we’re expecting more and more enterprises to upgrade their print fleet as they welcome more employees back to the office too.

Mike Yang, Analyst, Goldman Sachs: Right. Could you comment a little bit about the competitive environment in print? You know, there’s been some pressure for some time, particularly from foreign competitors. How does HP balance market share and margins given the competitive intensity in print?

Karen Parkhill, CFO, HP Inc.: Yeah, print does remain a competitive environment. I would say competitors always make us better too, so that’s good. Despite the competitive environment, we’re very focused on maintaining our discipline and running the business for the right profitability. That’s why you see us operate at the higher end of the margins across the print space. In some cases, we may choose to cede some share in certain geographies to maintain our discipline around the competitive environment. That’s just how we’re choosing to operate, I think, very smartly.

Mike Yang, Analyst, Goldman Sachs: Okay, great. Kind of relatedly, on print supplies, the company talked about higher supplies volume next quarter after a 4% year-over-year revenue decline this past one. How would you characterize the short and long-term dynamics across printing supplies, and any color you can provide around just supplies mix and some of the nuances in toner versus ink that might be helpful for people to think about?

Karen Parkhill, CFO, HP Inc.: Yeah. On the supplies front, just in the recent quarter and this quarter, there’s seasonality to it. We typically see lower supply sales in the summer months, and then we see it ramping as we move out of the summer and into the holiday season. That’s just very typical. It’s what we saw last year and what we expect this year. I would say longer term with the supplies business, we do expect a low single-digit decline because we do have a declining installed base. Again, we’re focused on operating that business very effectively and focusing on optimizing the profitability with the hardware placements that we’re doing and the supplies on top of it. When we see headwinds like tariffs, we are going to increase prices. We’ve done that, and we’re maintaining our discipline.

Mike Yang, Analyst, Goldman Sachs: Okay, great. One of the key growth areas of HP is the managed services business, which continues to show very strong growth. Maybe you can expand on some of these key growth areas for HP. What traction have you found most meaningful from these categories? Do they drive margin improvement? When should analysts and investors see more of these growth areas contribute to top and bottom line results?

Karen Parkhill, CFO, HP Inc.: Our key growth areas are designed to grow faster than the core, and they are higher margin. We like our key growth areas, and we’ve seen good growth come out of them for a while now. This past quarter, we saw strong double-digit growth, both quarter over quarter and sequentially in those areas. On the Personal Systems side, it’s our AI PCs, our workstation business, and our hybrid business. In our print business, it’s our subscriptions, our services, our industrial print, and 3D printing. We’re seeing good growth from all of those areas, actually, and expect that to continue.

Mike Yang, Analyst, Goldman Sachs: Great. Maybe just one last one on print. One thing that’s been remarkable is HP’s ability to continue to grow print margins, certainly over time. There’s just been an incredible focus on managing costs within the segment. Could you just elaborate on some of the margin and cost opportunities within print and how much more runway there is to keep managing costs tightly into the segment to stay in those long-term margin ranges?

Karen Parkhill, CFO, HP Inc.: Yeah, I would say we are really good at execution and at discipline. That’s one of the key reasons that you see us operating so effectively at the higher end of the margins across the print space. I would expect that to continue. As we look ahead, we see further improvement to our cost space. With the advent of embedding AI in almost everything that we do to make us more effective and more efficient, we’ve got more runway there. Think about it in our call centers and how we service our customers and how we look at credit and collections for our customers. Lots of areas that we have opportunity to both redefine our process and embed AI tools into those processes to enable us to be better and more cost-effective.

Mike Yang, Analyst, Goldman Sachs: Great. I mean, I think that’s a natural segue to talk about the company-wide cost program, the Future Ready Savings Plan, where HP’s talked about exceeding the original $2 billion of gross annual savings by the end of this year. Once the program’s done, do you see further opportunities across the organization? Where do you see those savings sitting in terms of the pockets of the P&L?

Karen Parkhill, CFO, HP Inc.: Yeah, thanks, Mike. First of all, I’m really pleased with that program and with the progress that we’ve made and the momentum that we had. The original cost savings target was $1.6 billion. We’ve increased it twice to $1.8 and to $2 billion. We’re well on track to deliver over $2 billion in cost savings by the end of this fiscal year. I’m pleased with how we’ve delivered that. Those cost savings have enabled us to withstand and offset a lot of the headwinds that have come our way, as well as invest in the future growth opportunities for the company. It’s been a really important program. I’d say as we look ahead, there are more opportunities. It relates to this notion of embedding AI into practically everything that we do, and again, changing our end-to-end processes. We do see more opportunity.

Expect to hear more from us on this, both on our fourth quarter earnings call and at our upcoming Investor Day in the spring.

Mike Yang, Analyst, Goldman Sachs: Great. Looking forward to getting the update there. Just on the other component of cost that’s been very top of mind, tariffs. HP’s done, I think, a very good job of mitigating the impact of tariffs on the P&L. I believe all products sold in North America were assembled outside of China last quarter. Could you talk a little bit about the company’s efforts in mitigating the impact of tariffs, production ramps elsewhere, oftentimes leveraging existing partners and suppliers that you’re using already? Also, how you think about pricing as well in that context.

Karen Parkhill, CFO, HP Inc.: Yep, yep, for sure. I’ve been really impressed with the speed and decisiveness with which our team has been operating in the tariff environment. I’d say we’ve done a nice job and are continuing to offset the decent impact that we’ve had from tariffs. It’s impacting each of our businesses a bit differently. In the PC business, the tariffs that we’ve been dealing with are mainly the China tariffs. We’ve been moving quite rapidly to move our manufacturing and our supply chain outside of China. By this past quarter, nearly all of the demand that we’ve been fulfilling in the U.S. has been manufactured outside of China. We’ve moved it to Thailand, Vietnam, Mexico, and the federal business that we have, we produced in the U.S. I’d say I’m impressed with the speed at which we’ve moved around our supply chain.

In the print business, we’ve been optimizing our vast supply chain and manufacturing network to offset the reciprocal tariffs that we’ve been dealing with in print. We’ve also been focused on driving our costs down everywhere that we can and increasing price where we need to. We’ve been focused on offsetting the impact across both of our businesses. We’ve said that we’ve made continued sequential traction Q2 into Q3. You’ve seen that improve in our margins. We expect further traction into Q4. Should we have more tariffs that come our way, we’re going to handle it the exact same way we’ve handled it so far.

Mike Yang, Analyst, Goldman Sachs: Great. Could we talk a little bit about the working capital strategies that you’ve deployed either, you know, in anticipation of tariffs through strategic purchases or to support supply chain resiliency, which I think has been particularly top of mind for companies just given the disruptions in the supply chain and shortages that we’ve seen in the last several years? What’s your philosophy around those types of strategic purchases? How do you think about that in the context of your overall free cash flow?

Karen Parkhill, CFO, HP Inc.: Yeah. As we focus on offsetting tariffs, we use everything at our disposal. Increasing inventory in the short term has been something that we’ve done to help offset tariffs. We’ve done it through strategic buys and through increasing our inventory to manage the moving supply chain and manufacturing network that we’ve been doing. You see an increase in inventory, but we’ve offset that with improvement in working capital elsewhere and expect to do that for the full year. While you’ve seen that increase in inventory, we have a negative cash conversion cycle in our PC business, and as we ramp that growth, that clearly helps. We’ve also been focused on accounts payable improvement there. We’re still expecting to deliver the free cash flow that we have, $2.6 to $3 billion for the year.

Mike Yang, Analyst, Goldman Sachs: Great. I do want to leave a minute or two for audience questions. Before I open it up, maybe I’ll ask a little bit about M&A. The company recently acquired Humane, including their AI-powered platform, Cosmos AI, and intellectual property. Could you talk a little bit about just the M&A strategy that HP is pursuing? How do you think about acquisitions more broadly?

Karen Parkhill, CFO, HP Inc.: Yeah, thank you. Yeah, we’re really pleased with the acquisition of Humane that we made a few quarters ago. Not only did that enable us to have the platform of Cosmos AI, but it also gave us a very experienced software engineering team. We’ve been using that team to bolster our own team to really focus on developing the connectedness across our devices for the future of work. We’re really pleased with that team and the traction we’ve been making there. As it relates to M&A in general, we’re going to be focused on M&A that fits our strategy to drive the future of work. We’re going to remain very disciplined about it.

We have a very firmly stated capital allocation framework that says that we’re going to return 100% of our free cash flow to our investors as long as our gross leverage remains under two times and unless there’s higher ROI opportunities. When we look at M&A, we’re very focused on ensuring that it is a much higher ROI opportunity that drives the long-term value creation for our shareholders. You can just expect us to maintain that discipline. We’re also focused on ensuring that whatever we acquire, we can execute really well against.

Mike Yang, Analyst, Goldman Sachs: Right. Great. Why don’t I see if there’s any audience questions? I think we’ve got one back there. If you could just get a mic over to that gentleman, please.

Unidentified speaker: Thank you for taking the question. Is there a sort of scenario or roadmap that can see the print business return to growth over some sensible time horizon?

Karen Parkhill, CFO, HP Inc.: Yeah, you know, we’ve got pockets of growth in print right now. You know, look at our industrial print business, which is roughly about 15% of our base, and it’s been growing double digits. It grew double digits this past quarter, both year over year and sequentially. That’s the kind of business that prints labels, you know, for industries, like the labels on our water bottles. That’s a good growth. We’re also seeing good growth in our subscription business. You know, I mentioned already, we expect that to continue. Overall print, while we see, you know, pressure, particularly in the home print segment and, you know, a bit of a declining installed base, we’re going to be focused on managing that incredibly well, as you’ve seen us do. We do think we have, you know, continued runway there to, you know, maximize profitability across that business.

Mike Yang, Analyst, Goldman Sachs: Excellent. To close things out, maybe you can just tie it all together for us, talk about some of the key priorities and strategic goals that you and the rest of the management team are focusing on over the next one to two years, and how that ties into the long-term vision for the business.

Karen Parkhill, CFO, HP Inc.: Yeah, thanks, Mike. We see really good continued momentum, as I mentioned, in the PC business. It’s driven by installed base, by Windows 11 refresh, by AI PCs. We expect that growth to continue the rest of this year, into next fiscal year. We’ve got good momentum, and you can expect us to continue to operate with discipline, particularly on preserving and improving our margins. Despite headwinds that come our way, like tariffs, we’re going to be focused on offsetting any of those headwinds as quickly as possible while continuing to invest in our future. We are very focused on shareholder value, on paying back to our shareholders, and on creating long-term intrinsic value of the company. Expect that to continue.

Mike Yang, Analyst, Goldman Sachs: Great. Karen, it’s been such a pleasure and such a privilege to have you on stage with us. Thank you so much for your time here today.

Karen Parkhill, CFO, HP Inc.: Thank you. Appreciate it, Mike.

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