The Windows 11 upgrade cycle and AI PC adoption has helped HP beat sales expectations, the company says.
The device manufacturer’s recent quarterly earnings report shows revenue for the third quarter rose 3% to $13.93 billion – just ahead of analysts expectations of $13.70 billion.
Revenue in the company’s personal systems unit also rose 6% to $9.93 billion.
"In Q3 we delivered a fifth consecutive quarter of revenue growth, driven by strength in Personal Systems and strong momentum in our key growth areas," said Enrique Lores, President and CEO of HP.
HP reported growth in personal systems, with consumer devices revenue up 8% and commercial systems up 5%. But it was less successful with printing, which fell 4% to $4 billion for the quarter — despite efforts to spur on that division earlier this year by adding AI software features.
While HP had good news on PCs, the company is experiencing challenges in other domains, Lores revealed.
"In services, momentum continued with strong revenue growth year-over-year, driven mainly by digital services and managed services," Lores said in a call with analysts. "Yes, we did see softer demand in hybrid systems as companies are delaying some of their IT projects."
HP reaping the rewards of AI PC adoption
Lores said HP was finding success in shifting sales to "higher value segments", including AI PCs, those devices with the technical specification to run AI.
"We are very pleased with the accelerating demand for the AI PC category, which grew revenue double digit sequentially," he said.
"It has surpassed our expectations with shipments continuing to ramp, now reaching over 25% of our mix, a quarter ahead of our plan."
“Strong momentum” in the AI PC ecosystem has played a key role for the company, Lores added, particularly as software companies continue to introduce AI-powered tools - which have grown by double digits quarter-on-quarter.
"Key ISV partners such as Adobe and Zoom are shifting workloads locally to take advantage of the NPU," Lores told investors.
Alongside strong sales of PCs for AI tasks, Lores said that HP would continue to use AI in-house operationally.
"Beyond driving structural cost reductions, we see tremendous potential to automate additional workflows, streamline decision-making and accelerate innovation across the business," he said.
"These capabilities will help us reduce complexity and drive lower costs. You will hear more about this from us in the quarters ahead."
Strong future
The company predicted that the continued impact of the Windows 11 refresh cycle bodes well for future sales.
"Looking forward, we remain confident in the strength of the PC market opportunity, and expect continued momentum from Windows 11 refresh and AI PC adoption,” said Karen Parkhill, CFO at HP.
Lores said that HP believes the PC market will stay strong for the rest of 2025.
"We expect the market to grow mid-single digits in the second half with continued strong momentum from Windows 11 refresh and the AI PC adoption," he said. "We believe these catalysts will continue to drive PC market growth in 2026."
Political pressures
While HP has had a boost from Microsoft pushing users to upgrade to new hardware via the end of support for Windows 10 looming in October, the PC maker has also had to contend with ongoing supply chain disruption as a result of US tariffs.
Lores said in a call with analysts that previous work to shift products made for the US market out of China were nearly complete.
"This quarter, as planned, nearly all products sold in North America are now built outside of China, helping to further reduce trade-related costs," Lores said. "We continue to ramp up production across Vietnam, Thailand, Mexico and the US."
"Most importantly, we have done what we said we would. We have demonstrated we can remain agile in responding to external pressures while staying focused on our long-term strategy," he added.
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