HP Inc shares lag broader market as analysts maintain cautious stance despite Q1 growth
HP Inc reported solid first-quarter results, yet the stock continues to underperform the S&P 500 and technology sector peers, leaving investors to weigh near-term earnings dips against long-term hardware momentum.
Shares of HP Inc have trailed the broader market significantly over the past 52 weeks, falling 20.4 per cent compared to the S&P 500 Index rise of 26.5 per cent. The disparity is even starker when compared to the Technology Select Sector SPDR ETF, which delivered a 49.2 per cent return during the same period. This underperformance persists even as the company posts operational improvements, with the Palo Alto-based firm reporting a 6.9 per cent increase in revenue to $14.4 billion for the first quarter of 2026.
Analysts have responded to the latest quarterly data with measured caution rather than enthusiasm. The consensus rating among the 15 analysts covering the stock remains a 'Hold', reflecting a divided view on the company's trajectory. While one analyst issued a 'Strong Buy' rating, the sentiment is weighted heavily towards caution, with nine analysts holding a neutral stance, one suggesting a moderate sell, and four recommending strong sells. This divergence in opinion highlights the uncertainty surrounding the company's ability to sustain growth amidst a challenging macroeconomic environment.
The recent financial results did offer some positive indicators for investors. Revenue grew by 6.9 per cent, while adjusted earnings per share rose 9.5 per cent to $0.81, meeting the top end of the company's guidance. The Personal Systems segment, which includes AI-powered personal computers, drove this momentum with an 11 per cent year-on-year increase in revenue and a 12 per cent rise in total units sold. However, these gains are tempered by expectations for the full fiscal year ending in October 2026, where analysts project adjusted earnings per share will dip nearly 9 per cent year-on-year to $2.84.
Market sentiment has been further influenced by recent adjustments from major investment banks. On 25 February, Bank of America lowered its price target for the stock to $16, maintaining an 'Underperform' rating. This move contrasts with the average analyst price target, which stands at $20.14. Despite the lower targets from some quarters, the stock is currently trading above the mean price target, suggesting that the market is pricing in some optimism regarding the company's hardware and services portfolio.
The company continues to operate through three main segments: Personal Systems, Printing, and Corporate Investments, serving consumers, businesses, and public sector clients globally. Historically, HP Inc has a mixed record of earnings surprises, having beaten or met consensus estimates in three of the last four quarters while missing on one occasion. This track record adds to the complexity of forecasting future performance, particularly as the broader technology sector sees significant institutional buying in peers like Amazon and NVIDIA.
As the market looks toward the fiscal year ahead, the focus remains on whether the momentum in AI PCs and personal computing can offset the projected decline in earnings. With the stock trading above the average analyst target, the coming months will be critical in determining if the current 'Hold' consensus shifts toward a more bullish outlook or if the underperformance relative to the S&P 500 continues.
