HP (NYSE:HPQ | HPQ Price Prediction) has quietly become one of the stronger-performing large-cap tech stocks of 2026. Shares closed at $29.47 on Aug. 20, putting them up more than 30% from the end of last year and within striking distance of the 52-week high reached earlier this month.
That makes HP’s fiscal third-quarter report on Aug. 26 especially important. The company has momentum in its PC business, a dividend yielding roughly 4% at recent prices, and a growing mix of higher-end AI PCs. But investors also have to weigh rising memory and storage costs, continued weakness in parts of the printing business, and a stock price that has already moved considerably.
For retirees and other income-focused investors, HPQ is an interesting combination of a relatively modest earnings multiple and meaningful dividend income. The question now is whether the business can deliver enough growth to support the rally.
HP’s Aug. 26 Report Comes After a Big Rally
HP has already given investors plenty to think about before fiscal third-quarter earnings. The company will review results for the quarter ended July 31 on Aug. 26, with its conference call scheduled for 5:30 p.m. ET. HPQ closed Aug. 20 at $29.47, leaving the shares up more than 30% from the end of 2025 and only modestly below their recent 52-week high. That makes this report more than a routine check-in. HP entered the quarter with fiscal 2026 non-GAAP EPS guidance of $2.90 to $3.10 and Q3 non-GAAP EPS guidance of $0.61 to $0.71. Recent market data also put the stock at roughly 10 times forward earnings. That valuation is not demanding compared with many technology stocks, but the rally means investors may now expect HP to show that stronger PC revenue can keep offsetting rising component costs.
The Dividend Helps the Retirement Case, but It Isn’t Guaranteed
For income-focused investors, including retirees, HPQ has another attraction: the dividend. HP declared a $0.30-per-share quarterly dividend in June, which works out to $1.20 a year if that quarterly rate is maintained. At the Aug. 20 closing price, that is an indicated yield of roughly 4%. HP also generated $800 million of free cash flow in fiscal Q2 and continues to forecast $2.8 billion to $3.0 billion for fiscal 2026. Management has said it intends to return approximately 100% of free cash flow to shareholders over time as long as gross leverage remains below two times and there are no better-return opportunities. That policy supports the income case, but it is not a promise that every dollar of future free cash flow will become dividends. HP also uses share repurchases, and dividends can always be changed by the board. For retirees, the payout can be useful, but the stock still carries normal equity risk.
AI PCs and Windows 11 Are Doing Much of the Heavy Lifting
The more interesting growth story is happening inside Personal Systems. Fiscal Q2 revenue for the segment rose 13% year over year to $10.2 billion, and HP said AI PCs increased from more than 35% to 44% of its shipment mix. CFO Karen Parkhill said the company expects AI PCs to reach 60% to 70% of shipments in fiscal 2027 and more than 70% by fiscal 2028. HP management also said roughly 30% of its Windows installed base was still on Windows 10 in late May, leaving additional room for the Windows 11 refresh cycle. Those trends helped HP post 9% companywide revenue growth in Q2, its eighth straight quarter of top-line growth, while Personal Systems operating profit rose 30%. The catch is that higher-priced AI PCs do not automatically mean higher profits. Memory and storage costs were already rising, and HP expects those pressures to continue through the second half of fiscal 2026.
The Risks Matter More After a 30%-Plus Rally
That cost pressure is the main reason not to treat Aug. 26 as an automatic launch date for the stock. Consumer Printing revenue fell 10% year over year in fiscal Q2, total Printing revenue was flat, and HP expects Personal Systems operating margins to remain below its long-term range for the rest of fiscal 2026 as input costs rise. HPQ may still look attractive next to Hewlett Packard Enterprise (NYSE:HPE) for investors focused mainly on current income and valuation: recent data put HPQ near 10 times forward earnings with an indicated yield around 4%, versus a higher forward multiple and a much lower yield for HPE. But that is not a clean apples-to-apples comparison. HPE completed its roughly $14 billion Juniper Networks acquisition in July 2025 and now has much greater exposure to networking, servers, hybrid cloud, and enterprise AI infrastructure. HPQ offers the simpler income story, but the Aug. 26 report still needs to show that PC momentum can hold up as costs rise.