Shares of HP Inc. fell sharply in after-hours trading on the personal computer and printing company's earnings report for the three months ending in July.

Share were down 10% at $27.63 in after-hours trading.

The drop came despite an earnings beat. HP reported earnings of 83 cents a share on revenue of $15.7 billion. Analysts were expecting earnings of 66 cents a share on revenue of $14.4 billion.

The PC maker has been hit hard by the so-called RAMageddon, a term for the supply shock for memory chips caused by increased demand from artificial-intelligence data centers. While HP's shares are up 10% this year, they're down about 20% from their 2024 highs around $38 a share.

The memory chip shortage has both dampened sales of HP's personal computers and laptops, which account for about 70% of overall sales. The rest comes from its printer division.

Analysts have been pretty glum about HP stock lately, with just two of the 19 polled by FactSet rating it a Buy. That's down from seven out of 19 two years ago. As CFRA's Brooks Idlet wrote ahead of earnings, "We expect a worsening decline in FY 27 as memory costs increase," in terms of the firm's earnings per share outlook.

While HP has raised prices to cover its higher memory costs and companies are still upgrading employees to Windows 11-compatible machines and AI-capable machines, Brooks sees smaller growth ahead in HP's personal systems division. "Further memory increases make for prices that are harder to justify," Brooks wrote.

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