By Priyanka G

Nov 26 (Reuters) - HP forecast its first-quarter

profit below Wall Street expectations on Tuesday, in a sign of

persistent choppiness in demand in the personal computers

market.

PC makers have seen demand retreat from its peak during the

pandemic, when customers stocked up on tech products. Besides,

demand for AI-powered PCs has remained muted in the mass market

even as it increased in the corporate and educational sectors

thanks to businesses and institutions looking to upgrade their

devices.

While AI PCs are expected to represent 43% of all PC

shipments by 2025, they only accounted for an estimated 17% this

year, according to research firm Gartner. AI PCs have not

boosted the overall PC demand as "buyers have yet to see their

clear benefits", Gartner analyst Mikako Kitagawa said.

According to research firm IDC, global shipments of

traditional PCs dipped 2.4% over the year earlier to 68.8

million units in the third quarter.

HP expects its adjusted profit per share to be between 70

cents and 76 cents for the first quarter, below analysts'

estimate of 85 cents, according to data compiled by LSEG.

"We have stock-compensation expense that's higher in first

quarter and it gets better in subsequent quarters," said Chief

Financial Officer Karen Parkhill.

"We are taking pricing and cost actions to offset some of

the margin headwinds in the personal systems and that's going to

have a more significant impact in the back half."

The company reported a 1.7% increase in revenue to $14.1

billion for the fourth quarter ended Oct. 31, compared with the

estimates of $13.99 billion.

The PC maker's adjusted profit 93 cents per share met

expectations.

For the fiscal 2025, the company forecast its adjusted

profit to be between $3.45 and $3.75 per share, the midpoint of

which is in line with analysts' estimate.