HP to Cut 6,000 Jobs by 2028: Inside the AI-Driven Restructuring

HP to Cut 6,000 Jobs by 2028: Inside the AI-Driven Restructuring

The tech sector's "Year of Efficiency" has seemingly extended into a decade of transformation. On November 26, 2025, HP Inc. (HPQ) sent ripples through the industry by announcing a significant workforce reduction plan that underscores the growing dominance of Artificial Intelligence (AI) in corporate strategy. The PC and printer giant revealed plans to cut between 4,000 and 6,000 jobs by the end of fiscal 2028, a move aimed at offsetting the costs of a massive pivot toward AI integration and operational streamlining.

This announcement came alongside HP’s fiscal fourth-quarter earnings report, where the company beat revenue expectations but provided a lackluster outlook for 2026, causing shares to slide in after-hours trading. For investors and industry watchers, the news is a double-edged sword: it promises long-term profitability and modernization but signals continued volatility and labor market contraction in the near term. As companies like HP trade human capital for digital capabilities, the mechanics of corporate restructuring are fundamentally changing.

In this analysis, we dissect HP's "Future Ready" strategy, the financial implications of these cuts, and what this signals for the broader technology landscape as we move deeper into the AI era.

The "Future Ready" Strategy 2.0

HP is no stranger to restructuring. The company recently concluded a three-year cost-saving program launched in 2022, which it claims exceeded expectations. Originally targeting $1.4 billion in savings, the initiative delivered a gross annualized run rate savings of $2.2 billion. However, the new announcement marks a distinct phase—what CEO Enrique Lores describes as a strategic pivot rather than a simple downsizing.

The new plan targets an additional $1 billion in gross annual run rate savings by 2028. To achieve this, HP is not just trimming fat; it is fundamentally redesigning its organizational architecture. The projected cuts of 4,000 to 6,000 employees represent approximately 7% to 10% of its current workforce of 58,000. These reductions will primarily affect administrative roles, back-office functions, and even product development teams where AI tools can accelerate output.

According to Reuters, the restructuring will incur approximately $650 million in labor and non-labor charges. Of this, roughly $250 million will be recognized in fiscal 2026 alone. This front-loaded cost structure suggests HP is eager to accelerate the transition, treating the immediate financial hit as a necessary investment for long-term margin expansion.

AI Integration: The Driver of Disruption

The core narrative driving these layoffs is the adoption of Artificial Intelligence. Unlike previous tech cycles where automation was limited to manufacturing or low-level data entry, Generative AI is now capable of handling complex tasks in coding, customer support, and supply chain management. HP’s strategy involves "embedding AI into everything we do," a sentiment echoed by many Silicon Valley executives in late 2025.

HP's utilization of AI is two-pronged:

1. Internal Efficiency:By deploying AI agents for IT management, HR processes, and software coding, HP aims to reduce the headcount required to maintain its massive global operations. CEO Lores noted that pilot programs over the last two years demonstrated that entire processes could be redesigned, not just optimized, using AI.

2. Product Innovation:The company is banking heavily on the rise of "AI PCs"—computers equipped with Neural Processing Units (NPUs) designed to run local AI workloads. By slimming down legacy teams, HP is reallocating resources to engineering teams focused on this new hardware category.

This shift reflects a broader industry trend where "digital labor" is beginning to displace human labor in white-collar sectors. For a deeper dive into how AI is reshaping tech workforces, reports from Bloomberg highlight similar moves by competitors like Dell and Cisco.

Financial Mechanics: Costs vs. Savings

To understand the rationale behind the restructuring, one must look at the Return on Investment (ROI) of the layoffs. Corporate restructuring is effectively a mathematical equation: does the Net Present Value (NPV) of future savings justify the immediate cash outlay for severance and reorganization?

Let’s break down the projected financials using the data provided by HP:

• Total Restructuring Cost ( ## C ## ):$650 Million (one-time, spread over 3 years)

• Annual Run-Rate Savings ( ## S ## ):$1 Billion (recurring, fully realized by 2028)

However, since savings ramp up over time, the actual break-even point will likely occur around late 2026 or early 2027. We can model this financial impact using a Python script to visualize the cumulative cash flow of this decision.

The code output would essentially confirm that while 2026 will be a year of "investment" (losses due to charges), the long-term profitability shifts dramatically positive by 2028, adding a pure $1 billion directly to the bottom line annually. For a company with operating margins often under pressure, this is a massive lever for Earnings Per Share (EPS) growth.

Market Analysis & Stock Reaction

Despite the promise of future efficiency, the immediate market reaction was tepid to negative. HP shares fell approximately 5-6% in extended trading following the announcement. Why? The guidance.

Investors are currently wary of the "AI promise." While companies promise that AI will lead to savings, the current reality involves high capital expenditures (CapEx) for AI infrastructure and volatile demand. HP forecasted fiscal 2026 adjusted earnings per share of $2.90 to $3.20, falling short of the average analyst estimate of $3.33. This gap suggests that the costs of the transition (including higher memory prices and tariffs) are weighing on profitability faster than the savings can materialize.

Furthermore, the printing segment—a traditional cash cow for HP—saw a revenue decline of 4%. As the world digitizes, the reliance on physical printing wanes, forcing HP to rely more heavily on its low-margin PC business. The layoffs are, in part, a reaction to this structural decline in printing, necessitating a leaner operation to maintain margins.

Market analysts from CNBC and other financial outlets noted that while the beat on Q4 revenue ($14.6 billion vs. $14.48 billion expected) was positive, the soft guidance signals that the "AI Supercycle" for PCs hasn't fully kicked in yet.

Future Outlook: The Era of the "AI Workforce"

HP's move is a microcosm of a larger phenomenon. We are witnessing the decoupling of revenue growth from headcount growth. In the past, to grow revenue by 10%, a company might need to increase headcount by 5-7%. In the AI era, companies aim to grow revenue while decreasing headcount.

For employees, this signals a volatile period where "safe" corporate jobs are scrutinized for automation potential. However, it also highlights the critical need for upskilling. The roles HP is likely to hire for in the future will be strictly centered around AI architecture, NPU optimization, and advanced data analytics.

The "Future Ready" plan is a high-stakes bet. If the AI PC market explodes as predicted in 2026-2027, HP will emerge leaner and more profitable than ever. If adoption is slow, the company will have sacrificed valuable human talent for efficiency gains that may not suffice to cover the revenue gaps in legacy printing. As fiscal 2028 approaches, HP will serve as a critical case study for the efficacy of AI-driven corporate restructuring.