To The Moon

$HP Inc(HPQ)$ is scheduled to report its Q3 2024 earnings on 28 Aug 2024 after market close. The market has a consensus estimate for the Q3 2024 revenue at $13,38 billion. The full year 2024's revenue is expected to be $53.62 billion and the earnings are expected to be $2.82 per share.

The earnings per share is expected to come in at $0.86 per share, this is equal to the same period last year.

Direct Funding for Expansion of Corvallis Facility

The Department of Commerce said on Tuesday (27 Aug) that HP (HPQ) and the US Department of Commerce signed a non-binding preliminary memorandum of terms for up to $50 million in proposed direct funding to HP under the CHIPS and Science Act.

This project will help to generate more than 250 jobs in manufacturing and construction, the funds would also be used to expand and modernize HP's facility in Corvallis, Oregon.

Investor Confidence Boosted By Growth In Personal Computing

HP has regained investor confidence by boosting growth in its Personal Systems segment, even as its Printing business struggles. Further, AI is driving the refresh cycle and increasing PC demand, offering promising long-term prospects. HP is poised to capitalize on these trends and enhance its business model, which features steady cash flows and strong shareholder returns.

The rising interest in generative AI-enabled PCs worldwide might aid the company’s resurgence in the PC market. During its second-quarter fiscal 2024 earnings call, HPQ suggested that AI PCs could be a key growth driver beginning next year.

HP projected that 40-60% of all PCs will be AI PCs in the next three years. Earlier this year, HPQ launched several AI PCs to expand its AI PC portfolio. These initiatives bode well for the company’s growth in the long run.

HP is also one of the largest sellers of printers. HP has been launching several new innovative models in the Printing segment. We believe that the continuous product launches will help the company stay afloat in the current uncertain macroeconomic environment.

We are also seeing HP Inc’s computer sales growth is back after they suffered a two year slump. I am expecting HPQ to provide more details on how AI PCs would be their key growth drive or main revenue contributor.

Canalys' latest forecast predicts that an estimated 48 million AI-capable PCs will ship worldwide in 2024, representing 18% of total PC shipments.

HP Inc (HPQ) Price Target Forecast

Based on 11 Wall Street analysts offering 12 month price targets for HP in the last 3 months. The average price target is $35.09 with a high forecast of $40.00 and a low forecast of $30.00. The average price target represents a -1.43% change from the last price of $35.60.

With the investors confidence back with the growth of HPQ personal computing segment, I believe we should be able to see significant movement in their stock price, helping them to gain a new high.

HP Inc (HPQ) Year-To-Date Returns

With a 20% return to investors on its stock price, I would think that HPQ is in a good position to overtake $Dell Technologies Inc.(DELL)$ in terms of AI-capable PCs.

Dell Technologies Inc. which has more than doubled in value this year due to its excitement for its AI-capable servers. HP has failed to receive any similar “AI pixie dust” to boost its valuation, though adoption of the new AI PCs could change that,

I am expecting HPQ to be able to perform better as along with growth in shipments, AI PCs are also expected to carry higher price tags, providing further opportunity for PC and component makers.

Technical (MACD and KDJ)

If we looked at how HPQ have been trading from the technical, we can see that over the last week, there is very limited movement on its stock price.

From the MACD, it looks like it is converging and we already saw KDJ signal went into a merge, so this might show that investors are adopting a wait and see attitude before HPQ earnings, as there is also Nvidia earnings that might have some impact related to AI enabled PC.

Summary

How HPQ navigate their growth in AI-capable PCs would be key to this upcoming earnings as they have a chance to overtake Dell in terms of market share, but we need to be cautious as we are also expecting a major $NVIDIA Corp(NVDA)$ earnings that might derail the stock price as AI-enabling is the key.

Appreciate if you could share your thoughts in the comment section whether you think HOQ would be able to provide a better guidance on their AI-enabled PCs.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.