HP reports Q2 revenue up 9% YoY to $14.4B, above $14B est., Personal Systems revenue up 13% YoY to $10.2B, and forecasts Q3 adjusted EPS above estimates
HP Inc. gave a profit forecast for the current quarter that signaled the company continues to contend with a dramatic increase in memory chip prices.
Context & Ripple Effects
HP's Personal Systems business had already been its main growth engine: it grew 5% in the 2025 first quarter, 6% in the third quarter, and 7% in the 2025 second quarter, while total company growth was more modest. The latest quarter accelerates that pattern, with Personal Systems up 13% and accounting for most of HP's reported revenue.
The coverage also shows a shift in earnings expectations. HP's 2025 second-quarter outlook fell below estimates and was followed by a sharp share-price decline, whereas the current above-estimate profit outlook comes despite management flagging higher memory costs.
First-order effects
- HP enters the current quarter with stronger-than-expected revenue momentum and an earnings outlook above consensus, led by its Personal Systems unit.
- Higher memory-chip prices become an immediate constraint on HP's profit conversion, even as PC-system sales are growing.
Second-order effects
- HP will need to balance component-cost absorption, pricing, and product mix more tightly; whether it can preserve the above-consensus outlook will be a key test of that execution.
- Other PC vendors facing the same memory-cost environment may face similar pressure to adjust pricing or prioritize higher-value system sales, making unit growth less informative than margin performance.
Third-order effects
- If memory costs remain elevated, the PC market could increasingly reward vendors with stronger procurement leverage and the ability to sustain premium or commercial-oriented mix, rather than those competing primarily on price.
- HP's results suggest that a demand recovery and component inflation can coexist; the durability of the recovery will depend on whether higher input costs are passed through without weakening system demand.
The trend: The larger trend is a PC-market recovery in which renewed system demand is being tested by a more inflationary component-cost backdrop.