I'm having the exact same problem as you. I actually returned my previous laptop and exchanged it for a brand-new replacement because I thought the issue might have been specific to that device, but the replacement is having the exact same problem with KB5121003.
My laptop is also an HP OmniBook X Flip 2-in-1 14-inch, model 14-KC0013DX / D31MHUA#ABA, with an AMD Ryzen AI 5 430, 16GB RAM, 512GB SSD, 2K OLED touchscreen, and Windows 11 Home 25H2.
The symptoms are essentially identical to what you described: the update downloads normally, asks for a restart, gets stuck at the HP logo during the reboot, and eventually Windows goes into Automatic Repair and rolls the update back. I also received error 0x800f0845 afterward.
I've already tried DISM, SFC, the Windows Update troubleshooter, and manually downloading/installing the update, but I get the same result.
What's especially concerning is that I had the exact same issue on my previous laptop and now I'm experiencing it again on the replacement. I also went back to the store and noticed that the display model of the same laptop was showing the failed update as well.
I demand to Microsoft to identify the cause and release a fix soon.