HP’s (HPQ) weaker-than-expected guidance is due in part to the rising cost of memory from the artificial intelligence boom, something that is not being seen by its competitors, such as Dell (DELL), Wall Street analysts said.
Shares fell 3% in premarket trading on Wednesday.
“HPQ’s guide reflects more significant/material memory cost headwinds vs. peers (Lenovo, DELL) that recently reported, though we see potential for upside vs. their prudent outlook if impacts are less severe than anticipated,” Evercore ISI analyst Amit Daryanani wrote in a note to clients. Daryanani kept his In-Line rating on HP but lowered his price target to $25 from $29 after the results.
Companies like Samsung (OTCPK:SSNLF), Sk hynix (HXSCF), Seagate (STX), Western Digital (WDC), Micron (MU), Sandisk (SNDK) and others are pushing through price increases for memory, in some cases, by as much as 30% to 50%, amid the demand for AI and high performance computing. While that has benefited these companies and is likely to do so for some time, it’s clearly hurting HP, analysts pointed out.
“Memory price inflation starts to rear its ugly head, but we believe risks are still biased downward from here,” Morgan Stanley analyst Erik Woodring wrote in a note to investors.
“And we can empathize with how difficult guiding for the next 12 months must be at this point – memory contract prices are moving 50%+ higher this quarter alone, supply of both DRAM and NAND will be limited in CY26, suppliers are [reneging] on long-term contracts, and clean room capacity is nearly non-existent. Said differently, while there is a historical memory supercycle playbook to work off of, this is an unprecedented memory supercycle.” Woodring has an Underweight rating on HP and lowered his price target to $20 from $21.
Wells Fargo analyst Aaron Rakers said the memory headwind could be worth as much as $0.30 per share in lost earnings for HP in fiscal 2026, given that memory and storage account for roughly 16% to 18% of total PC unit cost.
“We think HP could look to pass [through] price increases; however, demand inelasticity at 5%+ could provide challenges,” Rakers added. Rakers has an Underweight rating on HP and a $25 price target.