HP Announces 6,000 Job Cuts in Major Shift to AI Automation
- HP will cut up to 6,000 jobs by 2028 to replace human roles with autonomous "agentic AI" systems and save $1 billion.
- A shortage of memory chips caused by data center demand is driving up costs and threatening profit margins for consumer PCs.
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| Photo by Jayasahan Hansana on Unsplash |
HP Inc is preparing for a massive structural overhaul that will see its global workforce shrink significantly over the next three years. The PC giant has announced plans to cut between 4,000 and 6,000 jobs by the end of its 2028 fiscal year. This move is part of a broader strategy to streamline operations and pivot aggressively toward artificial intelligence. CEO Enrique Lores confirmed that these reductions will hit teams in product development and customer support the hardest.
The company aims to save roughly $1 billion annually through these measures. Management believes that deploying advanced AI tools internally will allow them to maintain productivity with fewer staff members. This is not just about automation of simple tasks. Lores specifically highlighted "agentic AI" as a key driver. This technology can make autonomous decisions and execute complex plans without constant human oversight. It effectively replaces layers of middle management and administrative coordination.
This announcement comes just months after a smaller round of layoffs in February 2025. The relentless pursuit of efficiency highlights a harsh new reality for the tech sector. Companies are cutting human capital to fund the expensive infrastructure needed for the AI revolution. HP is essentially betting that its future lies in software efficiency rather than headcount. The market reaction has been lukewarm as investors digest the human cost of this digital transformation.
The hardware side of the business is facing its own unique set of challenges. A global surge in memory chip prices is threatening to eat into profit margins. This price spike is a direct result of the AI boom itself. Massive data centers are gobbling up memory chips to train large language models and this insatiable demand has created a shortage for consumer electronics makers. It is a classic case of crowding out where enterprise buyers push up costs for everyone else.
Analysts at Morgan Stanley have warned that this trend could severely impact the bottom line for HP and its rivals like Dell and Acer. The cost of dynamic random access memory and NAND flash storage is climbing fast. These are essential components for every laptop and desktop computer sold today. HP expects to feel the full financial brunt of this in the second half of fiscal 2026. The company currently has enough inventory to weather the storm for now but that buffer will not last forever.
Management is taking defensive steps to protect margins against this inflation. They are qualifying lower-cost suppliers and may even reduce the amount of memory installed in some computer models. This "shrinkflation" approach could frustrate consumers who are already dealing with higher prices. Lores admitted that the company is taking a prudent approach to its financial guidance. The forecast for fiscal 2026 adjusted profit came in below Wall Street estimates and signaled a tough road ahead.
Despite these headwinds there are bright spots in the core business. Demand for AI-enabled PCs is growing faster than many expected. These specialized computers now make up more than 30% of total shipments. This suggests that the consumer appetite for local AI processing is real. However the disconnect between rising sales and falling profits paints a complicated picture. HP is successfully selling the future of computing but struggling to navigate the economic chaos that this future has created.