HP Inc. has been on a bullish trajectory, with its shares surging by 39.3% in the last year, outstripping benchmarks like the Zacks Computer – Micro Computers Industry and S&P 500 index. This uptrend underscores investors’ faith in HP’s cutting-edge product lineup, particularly its marked foray into the realm of artificial intelligence (AI).
Diving into HP’s AI Product Suite
HP recently rolled out a trio of AI-powered offerings – the innovative HP OmniBook Ultra Flip 14-inch Next-Gen AI PC, HP EliteBook X 14-inch Next-Gen AI PC, and Z by HP Gen AI Lab. The OmniBook Ultra Flip is a pioneering 2-in-1 AI laptop designed for AI creators, equipped with a host of high-end features including a 3K OLED display, haptic touchpad, 9MP AI camera, and Poly Audio, all powered by Intel INTC Core Ultra processor Series 2 embedded with a dedicated AI engine.
For business and professional use, HP introduced the EliteBook X AI PC boasting Advanced Micro Devices’ AMD Ryzen PRO processor and state-of-the-art memory structure delivering data processing at a lightning speed of 8000 Mbps on 64 GB of LPDDR5x RAM. Catering to professionals in data science, AI, and machine learning domains, HP also unveiled the Z by HP Gen AI Lab and Z by HP Boost, offering on-demand GPU resources and optimizing GPU utilization to reduce reliance on costly cloud platforms.
Charting HP’s AI Expansion Strategy
In its recent fiscal 2024 earnings call, HP signaled the potential of AI PCs to be a key growth driver in the upcoming year, further hinting at a strategic move to tap into the generative AI-driven PC market for a fresh surge in demand.
Challenges on the Horizon for HPQ Investors
Despite its optimistic stance, HP faces hurdles in the form of persistent inflationary pressures and softening demand in the PC realm due to market saturation. The rise of compact powerful devices also poses a threat to traditional PC sales. Additionally, tough competition looms large as rivals like Apple and Dell Technologies have also ventured into the AI products arena.
Apple, for instance, has integrated AI features into its latest devices like the iPhone 15 Pro. Dell offers a range of workstations with AI capabilities such as XPS 13, Inspiron 14 Plus, Inspiron 14, Latitude 7455, and Latitude 5455. These headwinds are anticipated to weigh on HP’s financial performance in the short run, with the Zacks Consensus Estimate for HPQ’s fiscal 2024 revenues projecting a 0.6% decline from the previous year.
Parting Thoughts
HP’s bold strides to bolster its position in the personal computing arena through the introduction of powerful AI-driven PCs are commendable. However, prevailing economic headwinds and inflationary woes are poised to impact its immediate trajectory. Hence, investors may exercise caution before delving into this Zacks Rank #4 (Sell) stock as of now.