For years, HP Inc. (HPQ) has been a company investors bought for the dividend, not the upside. A slow PC and printer business that pays a generous quarterly check, has a single-digit earnings multiple, and almost no story.
Then last Friday happened.
HPQ jumped sharply in a single session, up 15%, according to IBTimes. The buyers were not reacting to anything HP said. They were reacting to a rival’s earnings, five trading days before HP’s own report.
For the first time in a long time, investors are betting HPQ might be something other than a yield trap.
Lenovo earnings beat just changed how Wall Street prices HP
Lenovo, the world’s largest PC maker, blew through its quarterly numbers, Reuters reported. Revenue grew at the fastest pace in five years.
But that was not the only thing that woke the market.
Nearly four out of every ten dollars Lenovo brought in last quarter came from AI-related products, the company disclosed, per Benzinga. For a company most investors still think of as a PC maker, that is a tectonic shift.
More AI hardware coverage:
Here is the read-through that sent HPQ flying:
Lenovo and HP sit at the top of the global PC market. They sell to the same enterprise buyers, ship through the same channels, and ride the same refresh cycles. When one of them prints a quarter this strong on AI-related earnings, the market assumes the other is sitting on the same demand.
That assumption is what investors paid for on Friday.
JPMorgan’s new target shows measured belief, not euphoria
A week before the Lenovo print, JPMorgan analyst Samik Chatterjee quietly raised his price target on HP and kept his Neutral rating in place, a reversal of his prior position on the stock.
Last October, Chatterjee downgraded HPQ to Neutral, per Yahoo Finance, warning that the Windows 10 replacement boom was almost over and HP would face brutal comparisons in 2026.
The May target hike is him walking that pessimism back without calling it wrong, for now. The cycle is running hotter than he expected, but he is not ready to say it will last.
Other desks remain split. Morgan Stanley nudged its target higher in the same week. Bank of America stayed firmly negative and is warning that HP could cut its full-year guidance when it reports on Wednesday.
That is the standoff investors are walking into on May 27.
Why the May 27 earnings print matters more than the rally
HP reports fiscal second-quarter results after the close on Wednesday, May 27, 2026.
The Street is broadly expecting a modest beat, according to The Globe and Mail, but the number that really matters is the AI PC mix.
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Last quarter, HP said roughly a third of every PC it shipped was an AI-capable machine with a dedicated neural processing chip, up sharply from the prior period, per FinancialContent.
If that ratio jumped again, especially on the commercial side, HP is no longer a legacy hardware story. It is an AI PC re-rating candidate.
If it stalled, Friday’s rally was a head fake.
The cheap-stock setup that makes Friday’s move possible
HPQ trades at a forward earnings multiple in the single digits and pays a dividend yield close to 5%, per GuruFocus.
By its own ten-year standards, that valuation is steeply discounted, and that is the part most investors miss.
When a stock is priced for permanent stagnation, and the cycle quietly turns underneath it, the move higher does not need a blowout quarter. It needs a reason to doubt the bear case. Lenovo just delivered one. HP’s earnings could deliver another.
That is why a sleepy printer-and-PC name moved like a growth stock last week.
What still has to go right for the bull case
Friday’s rally is borrowed conviction. To keep it, HP has to confirm what Lenovo implied.
Five things have to land:
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AI PCs make up a bigger share of total shipments than they did last quarter.
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Commercial demand stays strong through the long tail of the Windows 11 transition, which IDC expects to run well into next year.
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Memory cost inflation is offset by pricing, not absorbed into margins.
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HP stops losing U.S. market share after a sharp slip earlier this year, per BofA industry data reported on Yahoo Finance.
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Management holds the full-year outlook instead of trimming it.
Miss two, and the rally fades. Hit four, and JPMorgan’s target will look too low for what HP just proved.
HPQ vs the S&P 500: a relative-value story, not a momentum one
Step back from Friday’s headline, and the gap between HPQ and the broader market tells a different story.
While the S&P 500 has been compounding gains, HPQ has been quietly losing ground.
Two stocks, two opposite years:
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The S&P 500 has climbed roughly 27% over the past 12 months, riding the AI infrastructure wave through every major mega-cap name, per FinanceCharts data
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HPQ has fallen roughly 24% over the same stretch, treated as a casualty of the cycle rather than a participant in it
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The S&P 500 has spent 2026 grinding higher, hitting record territory in late May
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HPQ is still down about 5% year-to-date, even after Friday’s double-digit surge erased months of losses
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The S&P 500’s dividend yield sits near 1.05%, per Multpl data, while HPQ pays close to 5%, a gap that signals how much pessimism is already priced in
That last line is the whole setup.
A stock yielding nearly four times the index is one that the market has stopped expecting to grow. It is also the kind of stock that re-rates violently when growth shows up.
Friday’s move was the first hint of that re-rating. The May 27 earnings print decides whether it sticks.
JPMorgan’s new target is not a verdict on HPQ. It is a placeholder. What Samik Chatterjee says next, and whether his Neutral rating turns into something warmer, depends entirely on what HP shows on Wednesday afternoon.
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This story was originally published by TheStreet on May 25, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.