HPQ Stock Tanks 8% After Tariffs Gut Q2 Earnings—Wall Street Shrugs, Moves On

HP Inc. just took a brutal hit—shares cratered over 8% as tariff costs slashed into Q2 profits. Another quarter, another company learning the hard way that trade wars have casualties.

The Numbers Don’t Lie

No fancy footwork here—the earnings report spelled disaster. Tariffs carved a visible chunk out of margins, proving even legacy tech giants aren’t immune to geopolitical headwinds.

Same Old Story

Analysts will spin this as a ’transitory challenge’ (their favorite euphemism for ’we guessed wrong’). Meanwhile, the stock bleeds out—classic Wall Street alchemy turning ’short-term pain’ into long-term shareholder losses.

TLDR

• HPQ stock fell 8% to $25.03 after missing Q2 earnings expectations.
• Revenue grew 2.4% year over year to $13.2 billion, driven by Personal Systems.
• Tariff-related costs reduced non-GAAP EPS to $0.71, down 13% from last year.
• Print revenue declined 3%, weighed by weak North American and Chinese demand.
• FY25 EPS guidance was moderated due to macroeconomic and trade uncertainties.

HP Inc. (NYSE: HPQ) shares traded at $25.03, down 8%, as of early afternoon following disappointing Q2 fiscal 2025 results.

HP Inc. (HPQ)

The company reported non-GAAP earnings per share of $0.71, missing the Zacks Consensus Estimate by 11.3% and declining 13% from last year’s $0.82 per share. HP’s next earnings date is scheduled for August 26, 2025, to September 1, 2025.

HP Inc $HPQ Q2 FY25 Earnings:

– Diluted EPS of $0.42 (-31% YoY)
– Adjusted Diluted EPS of $0.71 (-13% YoY)
– Net Revenue of $13.2 billion (+3.3% YoY)

“In Q2, we delivered solid revenue growth, led by strong Commercial performance in Personal Systems and continued momentum… pic.twitter.com/ylfOBDIjXF

— GuruFocus (@gurufocus) May 28, 2025

Revenue Highlights

HP delivered $13.2 billion in quarterly revenue, up 2.4% year over year but missing analyst expectations by 1.7%. Personal Systems revenue grew 8% in constant currency, with commercial PC sales up 9%. This segment benefited from strong demand for AI-integrated PCs and commercial offerings. However, the Print segment continued to struggle, with a 3% decline in constant currency, hurt by weak demand in North America and China.

Tariff Challenges and Margins

HP’s operating margin came in at 7.3%, pressured by about 100 basis points from added tariff costs. Gross margin dropped to 20.7%, reflecting both tariffs and higher commodity prices. Non-GAAP EPS was reduced by $0.12 due to these tariff expenses. Free cash FLOW was slightly negative this quarter, as the company faced delayed inventory payment timing.

Looking to mitigate tariff risks, HP accelerated its manufacturing diversification strategy. By June, nearly all products sold in North America are expected to be produced outside China. This shift aims to strengthen the supply chain and protect margins in the long term.

Guidance and Shareholder Returns

For fiscal year 2025, HP guided non-GAAP EPS between $3.00 and $3.30, and GAAP EPS between $2.32 and $2.62. Q3 non-GAAP EPS guidance was set at $0.68 to $0.80, below the Zacks Consensus Estimate, reflecting cautious expectations amid trade uncertainties. Free cash Flow for FY25 is expected between $2.6 billion and $3 billion, slightly reduced due to ongoing tariff and working capital pressures.

Despite these challenges, HP returned around $400 million to shareholders through dividends and share repurchases this quarter. The company also introduced over 80 new products and services at its global AMPLIFY conference, signaling continued innovation.

Performance Overview

HPQ’s performance has been underwhelming this year, with a year-to-date return of -22.43% compared to the S&P 500’s 0.41%. Over one year, the stock has dropped 20.94%, though its five-year return of 94.97% slightly outpaces the S&P 500’s 93.99%.