HP Reduces Workforce by 6,000 to Fund AI Expansion Plans

Technology manufacturer HP has committed to a workforce reduction of 4,000 to 6,000 employees worldwide by the end of October 2028 as part of its digital transformation strategy. The cuts affect approximately one-tenth of the California company’s 56,000 employees, with leadership emphasizing artificial intelligence’s critical role in driving future growth and competitiveness.
Product development teams, internal operations staff, and customer support departments will experience the most significant impact from the planned cuts. HP expects to spend $650 million on restructuring while achieving $1 billion in annual cost savings by 2028. These layoffs represent the second major workforce reduction this year, following the elimination of up to 2,000 positions in February.
HP’s financial performance shows impressive revenue generation, with fourth-quarter sales totaling $14.6 billion and surpassing market expectations. The company has successfully captured market share in AI-enabled computers, which accounted for more than 30% of shipments during the quarter concluding October 31. Demand for AI-integrated computing solutions continues expanding across consumer and enterprise markets.
However, profit outlook concerns have emerged. HP forecasts adjusted earnings per share between $2.90 and $3.20 for the upcoming year, significantly below analyst expectations of $3.33. Rising memory chip costs driven by intense datacenter demand have significantly impacted production expenses, with memory components now accounting for 15-18% of PC costs. Trade tariffs add further pressure.
Market response proved negative, with HP shares declining 6% after the announcement. The company’s transformation reflects broader industry movement toward AI-driven operations as businesses increasingly deploy automation technologies to streamline processes and reduce expenses, despite the significant human cost of workforce displacement.