HP Expands AI-Based Product Portfolio for PC Market

HP Inc.'s HPQ shares have gained 24.1% in the year-to-date period compared with the Zacks Computer Mini computers industry's growth of 19.7%. This growth reflects investors' confidence in HPQ's attempts to bring new products into the personal computersmarket and innovation in the artificial intelligence space.

HPQ recently integrated Galileo into its AI model development platform, Z by HP AI studio. This combined solution will enable users to circumvent biases and inaccuracies in outputs by correcting hallucinations and drifts in the models. This new innovation will help data scientists and AI creators deploy products rapidly and safely inside HP AI studio.

Additionally, HPQ has rolled out the HP OmniBook Ultra and HP OmniStudio X Desktop PC. The Omnibook measures 14 inches in size and features processors and graphics from Advanced Micro Devices. The Omnibook contains AMD's Ryzen AI 300 processor with AMD Radeon 800M graphics integrated into it.

The Omnibook was developed in collaboration with Advanced Micro Devices. On the other hand, OmniBook Ultra comes with Microsoft's free updates. The co-development of Ultrabook with AMD enabled it to reach the speed of up to 55 TOPS of NPU performance. The laptop also features HP AI Companion, an AI-enabled high-resolution 9-megapixel camera and Wolf Security.

HP Inc. Price and Consensus

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HPQ's OmniBook Ultra will receive a free update to Copilot+ from Microsoft. Moreover, this laptop is designed with up to 90% recycled metals and 5% ocean-bound plastics to reduce the impact on the environment.

The HP OmniStudio X Desktop is available in 27-inch and 31.5-inch all-in-one desktop platforms. The device comes with processors, including Intel Core Ultra 7 processors and optional NVIDIA GeForce RTX 4050 GPU with dedicated 6 GB GDDR6 for NVIDIA.

With these high-end NVIDIA and Intel processors, users can seamlessly work on video editing and AI projects. The desktop also features a 4K screen, 5-megapixel camera, Poly Studio and Adaptive audio for an immersive experience. The HP OmniStudio X Desktop is certified with EPEAT Gold with Climate+ and ENERGY STAR.

HPQ Benefits From Product Portfolio

The rising interest in generative AI-enabled PCs worldwide might aid the company's resurgence in the PC market. During its second-quarter fiscal 2024 earnings call, HPQ suggested that AI PCs could be a key growth driver beginning next year.

HP projected that 40-60% of all PCs will be AI PCs in the next three years. Earlier this year, HPQ launched several AI PCs to expand its AI PC portfolio. These initiatives bode well for the company's growth in the long run.

HP is also one of the largest sellers of printers. HP has been launching several new innovative models in the Printing segment. We believe that the continuous product launches will help the company stay afloat in the current uncertain macroeconomic environment.

Near-Term Challenges

The challenging macroeconomic environment and protracted inflationary conditions do not bode well for HP's prospects. There is a persistent challenge in the demand environment for the HPQ's PC and printing products as customers re-prioritize and continue to exercise caution in response to macroeconomic conditions.

Rising macroeconomic uncertainties and price sensitivity among customers are undermining the company's high-margin Printing business. Change in customer purchasing behavior, with more commercial customers buying items online, is negatively impacting HPQ's supplies.

HP also faces stiff competition in its PC and printer businesses. The PC segment competes with Lenovo, Dell, Acer, Apple and Toshiba Corporation, while the Printing segment competes with the likes of Xerox Corporation and Seiko Epson Corporation.

Conclusion

Although HP is battling near-term challenges due to macroeconomic uncertainties and soft demand environment but its hardware business is investing for a long term by rolling out AI-based PCs that can give it a competitive advantage in the evolving PC market.

The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company's fiscal 2024 earnings has been revised upward by 3 cents to $3.45 per share in the last 60 days.

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