HP's AI Transformation Comes at a Cost: Thousands Face Job Cuts in Major Restructuring

HP announced plans to cut between 4,000 and 6,000 employees by the end of 2028 as part of an AI transformation strategy aimed at generating $1 billion in cost savings.

The announcement, made on November 25-26, 2025, signals a major strategic pivot for the Palo Alto-based company and marks the latest wave of AI-driven workforce reductions sweeping through the tech industry.

The Numbers: Scale and Impact

Workforce Impact: The job reductions represent approximately 12 to 15 per cent of HP's global workforce. With HP employing around 58,000 workers as of October 2024, the cuts translate to roughly 7-10% of its total headcount. This positions HP among the most aggressive restructurers in tech this year, alongside Apple and Amazon.

Financial Implications: HP expects to cut between 4,000 and 6,000 jobs globally by fiscal 2028 as part of a plan to streamline operations and adopt artificial intelligence. The company projects $650 million in restructuring charges, with $250 million expected in fiscal 2026 alone. The payoff is approximately $1 billion in annual gross cost savings by fiscal 2028-end.

Historical Precedent: This isn't HP's first rodeo with massive layoffs. Nearly three years ago, the PC maker unveiled a different cost-cutting programme aimed at reducing 4,000 to 6,000 jobs, and more recently, the company let go between 1,000 to 2,000 employees in February 2025.

Why Now? The AI Imperative

The Strategic Rationale: The PC and printer maker will exit 2028 with gross savings of $1 billion annually as a result of the cuts, with savings coming from HP applying AI tools to areas like product development, customer support, sales and manufacturing.

CEO Enrique Lores framed it as essential for competitive survival, stating the company "needs to make sure the company stays competitive."

The Market Reality: Demand for artificial intelligence-enabled personal computers has continued to grow, accounting for more than 30 per cent of HP's shipments in the fourth quarter ended October 31. This shift toward AI-centric computing presents both opportunity and urgency for HP to retool its workforce.

Financial Performance and Outlook

Q4 Results: In the fiscal fourth quarter, which ended on October 31, HP reported a 4.2 per cent rise in sales to $14.6 billion, with profit, excluding some items, reaching 93 cents a share, beating analyst expectations of 92 cents.

The Catch: Despite beating revenue expectations, HP's profit guidance disappointed investors. HP gave a profit outlook for the current year that fell short of estimates, with adjusted earnings per share projected between $2.90 and $3.20 compared to analysts' average estimate of $3.32.

Market Reaction: Reuters reported that shares of the PC and printer maker fell 5.5% in extended trading following the news.

Headwinds Ahead: The Memory Chip Crisis

Beyond restructuring, HP faces external pressures that make layoffs more urgent. Rising global memory chip prices, driven by the surge in AI infrastructure, are expected to squeeze profit margins. HP expects to feel the impact in the second half of fiscal 2026, with higher price increases.

To mitigate these rising costs, HP is implementing aggressive actions like qualifying lower cost suppliers, reducing memory configurations and taking price actions.

The Broader Tech Industry Trend

HP's restructuring is part of a larger industry reckoning. Apple also announced more layoffs this week, though on a much smaller scale, confirming it was cutting "dozens" of roles in its global sales division. Major tech firms are reducing traditional roles while simultaneously ramping up hiring in AI-related positions.

Implications for HP Employees and the Market

The Human Element: Lores acknowledged the personal cost, saying during the earnings call that "these are some of the most difficult decisions we need to make, and we are committed to treating our colleagues with care and respect."

Global Impact: For Indian employees and IT professionals, these layoff announcements carry significant implications, as they could potentially affect hiring given India's global capability centre network and offshore delivery models.

Investor Sentiment: The layoff announcement sent mixed signals. While the company frames it as necessary for competitive positioning, investors responded negatively to the combined effect of disappointing guidance and massive restructuring costs.

Timeline and Next Steps

The cuts will unfold gradually between now and the end of fiscal 2028 (October 2028). With $250 million in restructuring costs expected in fiscal 2026, the initial wave of layoffs will likely begin soon, with additional tranches continuing through 2027-2028.

The Verdict: Necessity or Panic?

HP's restructuring reflects a genuine dilemma facing mature tech companies: adapt to AI or risk obsolescence. The company is simultaneously facing margin pressures from rising chip costs, competitive pressure from the AI PC boom, and pressure to reduce headcount before AI tools make certain roles redundant.

Whether this aggressive approach ultimately strengthens HP or further weakens it remains to be seen—but one thing is certain: the race to automate is forcing companies to shed the human workers they once depended on.

Fast Facts

How many jobs is HP cutting and why?

HP is cutting 4,000-6,000 employees (12-15% of workforce) by 2028. The restructuring targets $1 billion in annual savings through AI integration in product development, customer support, sales, and manufacturing. Rising chip costs and AI PC competition drive the urgency.

When will these layoffs happen?

The cuts will roll out gradually between now and October 2028. HP expects $250 million in restructuring costs in fiscal 2026, indicating initial layoffs will begin soon, with additional waves continuing through 2027-2028.

How does this affect investors and the company's outlook?

HP beat Q4 revenue expectations but disappointed with profit guidance. Stock fell 5.5% on the announcement. While layoffs aim to boost margins, rising memory chip prices pose ongoing challenges through 2026.