HP Inc shares jumped after the hardware maker reported its first sales increase in two years due to a resurgence of corporate computer purchases.

Fiscal third-quarter sales rose 2.4% to US$13.50 billion , the company said on Wednesday in a statement. Analysts, on average, projected US$13.4 billion. 

The growth was led by a resurgence in PC sales to businesses, said chief executive officer Enrique Lores in an interview. An ageing pool of computers and the looming end-of-support for Microsoft Corp’s Windows 10 helped push companies to upgrade their equipment, he said. Sales of consumer-oriented PCs declined 1% - a smaller drop than expected by analysts.

Still, the company cut its full-year profit outlook on a continued downturn in its printing unit. Profit, excluding some items, will be US$3.35 a share to US$3.45 a share in the fiscal year ending in October, HP said. That’s down from its previous outlook of as much as US$3.60.

Printing unit sales fell 3% to US$4.14 billion, a steeper loss than investors expected. Despite providing a smaller portion of total revenue than PCs, the printing business is much higher-margin and makes up a disproportionate share of the company’s earnings. Printer supply revenue is HP’s leading profit driver, said Woo Jin Ho, an analyst at Bloomberg Intelligence.

Sales declines in the printing business are expected to continued at least through the end of the year, Lores said in an interview, adding that businesses have little incentive to upgrade their printers at this point.

The shares jumped 5.7% on Thursday morning in New York, their biggest intraday gain since May 30. HP’s stock had risen about 16% through Wednesday’s close.

The PC market had seen a historic decline over the last two years after many consumers, businesses and schools purchased laptops in the early months of the pandemic. A long-awaited rebound began to materialise this year. In the second quarter, shipments picked up 3% - the second increase since the end of 2021 - industry analyst IDC said in July. 

Palo Alto, California-based HP and peers such as Dell Technologies Inc recently embarked on a marketing blitz for a new type of computer they are dubbing “AI PCs”, promising artificial intelligence (AI) features embedded in laptops and desktops. Lores said the devices had seen “good momentum”, but at this point remain a small share of the company’s overall business.

The company also announced a US$10 billion share buyback programme, its first since February 2020.

  - Bloomberg