Wu reiterated a "Buy" rating on the stock and maintained his target price at $54. HP's advantages, he said, are sustainable, with room for further cost reductions and market share gains.

"Recently, there have been concerns with HPQ's ability to cope with a tougher macroeconomic environment due to its large size, data points from Taiwan-China indicating softening PC demand trends, and rival Dell Inc.'s turnaround efforts," Wu wrote.

But the analyst said the company's current quarter appears robust, and it doesn't seem that Dell's efforts to turn around its business are hurting HP. Better-than expected demand, a broad geographic reach and ongoing market share gains are the reasons for HP's ongoing success, he said.

Wu added that while it is early to tell, he thinks the company is tracking above the upper end of its guidance range for the quarter. HP had forecast sales of $27 billion to $27.2 billion and earnings of 80 cents to 81 cents per share. Wu expects higher sales of $27.3 billion and a profit of 82 cents per share.

Shares of HP, the world's largest technology company by revenue, fell 22 cents to $50.76 in afternoon trading.

Shares of computer maker Dell fell 32 cents to $27.64.

Citi Investment Research analyst Richard Gardner said Dell's fiscal third-quarter revenue and earnings look to be tracking in line with his and Wall Street's consensus estimates.

Analysts polled by Thomson Financial expect the company to post a profit of 34 cents per share on sales of $15.33 billion.

Gardner reiterated a "Buy" rating on the stock and said he would use any short-term pullbacks to accumulate shares ahead of a buyback announcement in late November, a seasonally strong fourth quarter and an "aggressive push into retail" in 2008.

Dell, which built its business on selling computers directly to customers and businesses, is expanding its retail business to better compete with HP and other rivals.