How HP's AI-Driven Transformation Leads 4,000 Job Losses

HP is accelerating its shift to AI as a central part of its strategy to enhance productivity and competitiveness, according to CEO Enrique Lores.

Speaking alongside the company’s fiscal 2025 results, Enrique said that AI adoption will transform operations across product development, customer support, sales and manufacturing.

However, the company also plans to reduce its workforce by 4,000 to 6,000 employees by the end of fiscal 2028.

The cuts, representing roughly 10% of HP’s 58,000-strong workforce, are being explicitly driven by the deployment of AI tools to streamline processes and automate repetitive tasks.

HP expects the initiative to deliver gross annual savings of around US$1bn, with restructuring charges estimated at US$650m, including US$250m in fiscal 2026. 

Enrique stressed that the layoffs are part of a strategic shift, not simply a cost-cutting exercise. 

HP’s AI use and financial performance

Over the past two years, HP has rolled out AI pilots, including agentic AI that can operate with minimal human intervention, to drive efficiency and accelerate decision-making. 

The CEO explained that redesigning processes with AI can have “a very significant impact,” underscoring that the company sees automation as a tool to reimagine work and improve both productivity and customer experience.

HP’s fiscal 2025 revenue reached US$55.3bn, up 3.2% year-over-year, while fourth-quarter revenue increased 4.2% to US$14.6bn, the company reports. 

Despite revenue growth, profit per share fell short of expectations, with non-GAAP earnings projected at US$2.90 to US$3.20 for fiscal 2026, compared with analysts’ estimate of US$3.32, according to Bloomberg. Rising memory chip costs and tariffs on products manufactured in China contributed to the shortfall.

Previous job cuts

The AI-driven job cuts follow earlier workforce reductions. In February 2025, HP laid off 1,000 to 2,000 employees as part of a separate restructuring initiative. 

At the time, the CEO gave a profit outlook for the first quarter of 2025 that fell short of expectations, citing the impact of rising component costs and tariffs on goods from China.

According to Bloomberg, three years ago, the company executed a similar programme, cutting 4,000 to 6,000 positions and achieving US$2.2bn in gross savings. 

The current round, however, explicitly ties workforce reductions to AI adoption, signalling a structural shift in how HP plans to operate.

Enrique framed the workforce reductions as part of a disciplined, forward-looking strategy. He said: “As we accelerate innovation across AI-powered devices to drive productivity, security and flexibility for our customers, our focus for fiscal year 2026 is on disciplined execution.” 

By combining AI adoption with targeted layoffs, HP aims to strengthen its competitive position while mitigating rising component costs and improving operational efficiency.

HP’s approach underscores a broader trend in the technology sector, where AI is increasingly used to automate tasks, redesign workflows and improve outcomes, without fully replacing human judgement. 

Through this AI-driven transformation, HP is aiming to boost productivity, enhance customer satisfaction and secure long-term competitiveness.