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HP Expands AI-Based Product Portfolio: How to Play the Stock?
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HP Inc. (HPQ - Free Report) shares have gained 39.3% in the past 12 months, outperforming the Zacks Computer - Micro Computers Industry’s and the S&P 500 index’s return of 32.9% and 33.8%, respectively. HPQ’s outperformance reflects investors’ confidence in the company’s innovative portfolio, which is also demonstrating significant growth in the artificial intelligence (AI) space.
Recently, HPQ launched the 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 first-of-kind 2-in-1 AI laptop for AI creators. It features a 3K OLED display, haptic touchpad, 9 MP AI camera and Poly Audio. The laptop runs on Intel (INTC - Free Report) Core Ultra processor Series 2 with a dedicated AI engine.
For business and work usage, HP has launched the EliteBook X AI PC that features Advanced Micro Devices’ (AMD - Free Report) Ryzen PRO processor and memory architecture with a processing speed of 8000 Mbps on 64 GB of LPDDR5x RAM. For professionals working in data science, AI and machine learning, HPQ has launched the Z by HP Gen AI Lab and Z by HP Boost, which provide access to GPU resources on-demand. Z by HP also maximizes GPU utilization, reducing the need for expensive cloud platforms.
These AI-based devices were launched at the HP Imagine event. HPQ also launched a number of other devices in this event. These devices are video bars like Poly Studio X32, X72, V32 and V72 premium. The company also launched HyperX Cloud MIX-2 headphones, HP Series 5 Pro Monitors and several software.
HP Inc. 12 Month Performance
Image Source: Zacks Investment Research
HPQ Focuses on Expanding AI Portfolio
During the second quarter of the fiscal 2024 earnings conference call, HPQ suggested that AI PCs could be a key growth driver beginning next year. HP also hinted at its interest in expanding in the generative AI-enabled PC market to get a fresh boost in its PC demand.
HPQ forecasted that 40-60% of all PCs will be AI PCs in the next three years. To make the most of the growing opportunities in this category, HP has launched several AI PCs this year and plans to continue to expand its AI PC portfolio.
HP had also launched multiple AI-based PCs earlier in 2024. HPQ’s portfolio of AI computers, alongside the recently launched computers, also includes the HP OmniBook X AI PC, HP EliteBook Ultra AI PC, HP OmniBook Ultra laptop and HP OmniStudio PC. While the HP Omnibook X and EliteBook Ultra feature Qualcomm’s Snapdragon processors, OmniBook Ultra and OmniStudio feature Intel chips inside them. HPQ, in collaboration with Qualcomm, Intel and AMD, is making significant strides in advancing AI-powered PCs.
Near-Term Headwinds for HPQ Stock
HPQ suffers from protracted inflationary conditions and softened demand in the PC space. The weak demand in the PC space is mainly due to the market saturation and introductions of powerful pocket-sized devices that fulfill the purpose of owning PCs. Moreover, competition from other companies, including Apple and Dell Technologies (DELL - Free Report) , which are also launching AI-based products, is a major headwind for HPQ.
Apple recently integrated AI capabilities into its devices. Apple’s AI updates are available on iPhone 15 Pro and newer devices. Dell has numerous workstations that offer AI capabilities. These workstations are XPS 13, Inspiron 14 Plus, Inspiron 14, Latitude 7455 and Latitude 5455.
These headwinds are likely to hurt HP’s near-term financial performance. The Zacks Consensus Estimate for HPQ’s fiscal 2024 revenues is pegged at $53.46 billion, indicating a 0.6% decline from the year-ago quarter.
Conclusion
HP’s aim to expand its market share in the personal computing space with the introduction of powerful AI-based PCs is praiseworthy. However, a tepid IT spending environment and protracted inflationary pressure are likely to continue impacting its near-term performance. So, it is prudent for investors to stay away from investing in this Zacks Rank #4 (Sell) stock for now.
Image: Bigstock
HP Expands AI-Based Product Portfolio: How to Play the Stock?
HP Inc. (HPQ - Free Report) shares have gained 39.3% in the past 12 months, outperforming the Zacks Computer - Micro Computers Industry’s and the S&P 500 index’s return of 32.9% and 33.8%, respectively. HPQ’s outperformance reflects investors’ confidence in the company’s innovative portfolio, which is also demonstrating significant growth in the artificial intelligence (AI) space.
Recently, HPQ launched the 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 first-of-kind 2-in-1 AI laptop for AI creators. It features a 3K OLED display, haptic touchpad, 9 MP AI camera and Poly Audio. The laptop runs on Intel (INTC - Free Report) Core Ultra processor Series 2 with a dedicated AI engine.
For business and work usage, HP has launched the EliteBook X AI PC that features Advanced Micro Devices’ (AMD - Free Report) Ryzen PRO processor and memory architecture with a processing speed of 8000 Mbps on 64 GB of LPDDR5x RAM. For professionals working in data science, AI and machine learning, HPQ has launched the Z by HP Gen AI Lab and Z by HP Boost, which provide access to GPU resources on-demand. Z by HP also maximizes GPU utilization, reducing the need for expensive cloud platforms.
These AI-based devices were launched at the HP Imagine event. HPQ also launched a number of other devices in this event. These devices are video bars like Poly Studio X32, X72, V32 and V72 premium. The company also launched HyperX Cloud MIX-2 headphones, HP Series 5 Pro Monitors and several software.
HP Inc. 12 Month Performance
Image Source: Zacks Investment Research
HPQ Focuses on Expanding AI Portfolio
During the second quarter of the fiscal 2024 earnings conference call, HPQ suggested that AI PCs could be a key growth driver beginning next year. HP also hinted at its interest in expanding in the generative AI-enabled PC market to get a fresh boost in its PC demand.
HPQ forecasted that 40-60% of all PCs will be AI PCs in the next three years. To make the most of the growing opportunities in this category, HP has launched several AI PCs this year and plans to continue to expand its AI PC portfolio.
HP had also launched multiple AI-based PCs earlier in 2024. HPQ’s portfolio of AI computers, alongside the recently launched computers, also includes the HP OmniBook X AI PC, HP EliteBook Ultra AI PC, HP OmniBook Ultra laptop and HP OmniStudio PC. While the HP Omnibook X and EliteBook Ultra feature Qualcomm’s Snapdragon processors, OmniBook Ultra and OmniStudio feature Intel chips inside them. HPQ, in collaboration with Qualcomm, Intel and AMD, is making significant strides in advancing AI-powered PCs.
Near-Term Headwinds for HPQ Stock
HPQ suffers from protracted inflationary conditions and softened demand in the PC space. The weak demand in the PC space is mainly due to the market saturation and introductions of powerful pocket-sized devices that fulfill the purpose of owning PCs. Moreover, competition from other companies, including Apple and Dell Technologies (DELL - Free Report) , which are also launching AI-based products, is a major headwind for HPQ.
Apple recently integrated AI capabilities into its devices. Apple’s AI updates are available on iPhone 15 Pro and newer devices. Dell has numerous workstations that offer AI capabilities. These workstations are XPS 13, Inspiron 14 Plus, Inspiron 14, Latitude 7455 and Latitude 5455.
These headwinds are likely to hurt HP’s near-term financial performance. The Zacks Consensus Estimate for HPQ’s fiscal 2024 revenues is pegged at $53.46 billion, indicating a 0.6% decline from the year-ago quarter.
Conclusion
HP’s aim to expand its market share in the personal computing space with the introduction of powerful AI-based PCs is praiseworthy. However, a tepid IT spending environment and protracted inflationary pressure are likely to continue impacting its near-term performance. So, it is prudent for investors to stay away from investing in this Zacks Rank #4 (Sell) stock for now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.