HP (HPQ) will see meaningful earnings pressure next year from rising memory costs, Morgan Stanley said Wednesday in a report, warning that risks to the company's fiscal 2026 outlook remain tilted to the downside amid what it called an unprecedented memory inflation cycle.

Fiscal 2026 guidance includes about $0.30 of earnings per share headwinds tied to memory price inflation, and Morgan Stanley said the outlook assumes limited demand elasticity, expectations for PC revenue growth next year and an improving print business.

The firm's revised fiscal 2026 EPS estimate of $2.85, which bakes in additional margin pressure, remains below management's guidance.

Morgan Stanley cut its price target to $20 from $21 and kept an underweight rating on HP's stock.

Shares of HP were down nearly 2% in recent trading.

Price: 23.90, Change: -0.43, Percent Change: -1.75