The chief executive of HP Inc (NYSE HPQ) is confident that the company is well-positioned to deal with Trump tariffs.
Enrique Lores, a spokesperson for the multinational, said that it has been diversifying to build a more resilient supply chain over the last three years.
HP has already begun manufacturing “a very relevant portion of the products that will be coming to the US” at locations other than China.
HP stock is down around 10% today after it provided a tepid outlook for its fiscal Q1.
HP margins will be affected by Trump tariffs
HP is confident in the ability of its team to manage tariffs raised under Trump’s presidency.
The chief executive told Jim Cramer last night that once the new tariffs were announced, “we will design the right footprint for the company” in his interview.
Enrique Lores believes that higher component costs will continue to impact margins in the early half of 2025.
The sell-off today may be a good opportunity to buy HP shares, as its CEO stated that “We will perform more than the market” in the upcoming year.
HP stock pays a healthy 2.82% dividend, which is another reason to include it in your portfolio.
HPQ could benefit from AI PCs in the future
HP has already begun launching its next-generation AI-enabled computers that it believes will help boost productivity and drive business in 2025.
Enrique Lores, CEO of Mad Money, revealed on Mad Money last night that “we have some large clients who have decided to adopt AIPCs for their entire workforce.”
He doesn’t believe that AI personal computers will pose a threat to cloud-based companies like Salesforce.
The chief executive said that “for many things the cloud solutions they provide will be extremely valuable to our customers.”
HP’s adjusted per-share earnings for the full year are expected to be between $3.45-$3.75 – roughly in accordance with analysts’ expectations.
HP’s stock is up 35% from its April low for the year.
HP stock can rise to $40
Analysts at JPMorgan still see a potential upside of $40 for HP stock. This would indicate a potential 11% increase from current levels.
In a research note published today, the investment firm acknowledged that there are near-term challenges. These include pricing dynamics and competitive dynamics. The investment firm said that if AI optimism pans out in the future, HPQ prices could rise significantly in the next year.
Note that HP Inc. reported a 1.7% increase in revenue year-on-year to $14.1 billion for the fourth quarter, which was higher than the consensus estimate of $14.99 billion.
The PC maker’s earnings per share were 93 cents in the recently completed quarter, which was in line with expectations on Wall Street.
The post HP CEO explains how Trump tariffs could affect the PC maker can be modified as new information unfolds
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