The earnings reports of Intel and AMD indicate the PC market is showing signs of a robust rebound.
The PC market had been confronted with a surplus of inventory due to the pandemic, but it now appears to be stabilising.
The adoption of artificial intelligence in PCs would also foster new growth opportunities said Intel and AMD executives.
“The arrival of the AI PC represents an inflection point in the PC industry,” indicated Intel CEO Pat Gelsinger.
While AMD exec Lisa Su asserted she “expected some growth going into 2024 as we think about sort of the AI PC cycle and some of the (Microsoft) Windows refresh cycles”.
AI has been integrated into all manner of devices, from ovens to smartphones, but in the PC market, AI-enabled PCs will have advanced chips that can run large-language models and apps driven by tech on the device, not on the cloud.
Recently, AMD’s PC-focused part of their business posted its best growth in two years just this September. For Intel, their PC unit’s revenue decrease was the slowest in eight quarters.
“The PC market saw a significant pull in of demand due to all kinds of impacts of the pandemic (such as remote work),” said senior portfolio manager at Voya Investment Management Justin Sumner, who is also an investor in AMD and Intel.
“We are finally starting to see a bottoming of this trend. This should lead to a typical inventory refresh and an improvement in the market.”
Before the holiday season, PC manufacturers have been attempting to reduce stock in preparation for Black Friday, holiday shopping, and before a potential Windows update next year from Microsoft.
According to data from research firms such as Canalys, after a measured regression in industry-wide PC shipments in the third quarter, it anticipates the market will get a boost during the holiday season.
The data also suggests the adoption of AI-capable PCs will begin to gain speed from 2025 onwards and will account for 60% of all PCs shipped in 2027.
However, investors are only partially convinced, with some seeing a lack of AI apps being an obstacle for the industry.
Microsoft is the first and only major business in the game to design the AI-powered Copilot software recently added to Microsoft 365 for enterprise customers.
“It is still unclear to us that there is a ‘killer app’ which will spur this upgrade cycle,” said an investor in AMD and Intel and senior research analyst at Columbia Threadneedle Dave Egan.
