Despite HP Inc (HPQ.US) reporting third-quarter results that exceeded market expectations and providing guidance largely in line with market forecasts, investors remain concerned about economic uncertainty and the impact of higher costs related to trade policies under President Trump. The financial results showed that for the third quarter of fiscal 2025 ended July 31, the company's revenue increased 3.1% year-over-year to $13.9 billion, surpassing analysts' average expectation of $13.7 billion. Adjusted earnings per share came in at $0.75, beating analysts' average estimate of $0.74.

In an interview, CEO Enrique Lores stated that to address tariff impacts, HP Inc has moved nearly all products sold in North America to manufacturing facilities outside of China and has raised prices on some products. During the post-earnings conference call, CFO Karen Parkhill told analysts that the company "successfully absorbed most of the tariff costs in the third quarter while still achieving earnings per share slightly above the midpoint of guidance." She added: "As we've said, we do expect to fully offset these trade policy-related costs as soon as possible. The full effect of our mitigation measures may take some time, depending on the scope. But again, we expect to fully offset as soon as possible."

In the third quarter, HP Inc's Personal Systems business revenue grew 6% year-over-year to $9.9 billion, with personal computer unit sales increasing 6%. Enrique Lores said in the interview that the company expects PC unit sales to continue achieving "mid-single-digit" growth in the fourth quarter. Enterprise customers are upgrading to devices running Microsoft Windows 11, as well as new AI PCs, which now represent more than 25% of HP Inc's product portfolio, achieving the company's target one quarter ahead of schedule. He added that consumer PC sales also performed better than expected. "We are confident that PC unit sales will continue to grow. AI PCs and Windows 11 will continue to drive demand," he stated.

However, printing business revenue declined 4% year-over-year to $4 billion in the third quarter, missing expectations and continuing to drag down overall profitability—the business's profit margins declined further from the previous quarter. Enrique Lores stated that the company is focusing on higher-priced, higher-margin printer products to improve profitability.

"From a market perspective, the signs we're seeing are all strong, especially in PCs, and we expect this trend to continue," Karen Parkhill noted. "But if there's some kind of market shock, we might be at the lower end of the (earnings expectation) range."

The long-struggling PC market is beginning to show signs of recovery, but U.S. tariffs have added uncertainty. Industry research firm Gartner reported that global PC shipments grew 4.4% in the second quarter of 2025, primarily driven by enterprise customers upgrading to Windows 11 devices and replacing equipment purchased during the pandemic. The firm noted that consumer demand has lagged relatively, with buyers postponing purchases. Enterprises accumulated PC inventory in the first half of the year to avoid tariffs. In a statement last month, Gartner said: "By the second half of 2025, as manufacturers digest inventory based on demand, shipment growth is expected to level off, which could create excess inventory before year-end."

Enrique Lores stated that HP Inc has not observed "substantial" advance purchasing activity.