Another giant lays off employees due to AI! HP plans to reduce 10% of its workforce by 2028

HP announced it will cut up to 10% of its workforce, becoming the latest tech giant to significantly reduce manpower in pursuit of an artificial intelligence strategy. According to media reports on Wednesday, the restructuring plan is expected to affect approximately 4,000 to 6,000 employees, with layoffs to be completed by the end of fiscal year 2028. HP disclosed a total employee count of about 58,000 in its latest annual report. CEO Enrique Lores stated that the company is leveraging AI to accelerate product and software development, as well as to automate customer support and internal processes. HP expects the restructuring to incur approximately $650 million in related costs, with $250 million occurring in the current fiscal year. However, by the end of fiscal year 2028, these initiatives are expected to save at least $1 billion annually. This layoff plan comes as HP faces rising cost pressures in its personal computer business. The surge in demand for AI in data centers has driven up memory chip prices, which is expected to have a net drag of 30 cents on earnings per share for the current fiscal year. AI Transformation Drives Major Restructuring Lores emphasized that the restructuring plan is a core initiative for HP to adopt AI technology company-wide. "We really believe this is a unique opportunity that cannot be missed, to truly transform the company sustainably and remain competitive over the next 10, 20 years," he said. Despite layoffs in certain departments due to internal AI adoption, HP also plans to increase investments in some areas to further integrate the technology into its product portfolio. Lores stated, "I think every job will be impacted by AI, and as a company, we need to leverage that." Cost Pressures Weigh on Performance Expectations HP's financial outlook for the current fiscal year is below market expectations. The company expects adjusted earnings per share to be between $2.90 and $3.20, lower than the $3.34 expected by analysts surveyed by FactSet. For the first fiscal quarter, the company anticipates adjusted earnings per share of 73 to 81 cents, while analysts expect 78 cents. Rising memory chip prices have become a major source of cost pressure. HP plans to partially offset these costs by raising computer prices, collaborating with low-cost suppliers, and reducing memory configurations. However, Lores noted that even with these measures, earnings per share are still expected to face a net drag of 30 cents for the current fiscal year. "As you can see, this is a very significant number, and this is the net impact after all the actions we have already implemented," he said. HP's fourth fiscal quarter results showed a mixed performance. The company's profit was $795 million, or 84 cents per share, down from $906 million, or 93 cents per share, in the same period last year. Adjusted earnings per share were 93 cents, slightly above the 92 cents expected by analysts. Revenue grew 4.2% to $14.64 billion, exceeding analysts' expectations of $14.5 billion. Revenue from the personal systems business grew 8% to $10.35 billion, offsetting a 4% decline in the printing business, which generated $4.27 billion in revenue