Over the past week, the financial reports of Intel and AMD have further confirmed that the pace of recovery in the personal computer (PC) market is accelerating, which undoubtedly bodes well for an industry that has been working hard to address oversupply issues since the pandemic.
In the latest financial report conference call, executives from both companies highly praised the stabilizing trend of the PC market and expressed their expectation that the integration of artificial intelligence will further promote growth.
Intel CEO Pat Gelsinger said, "We believe that AI PC will be a key turning point in the PC market in the coming years, and every product we offer will integrate AI
AMD CEO Su Zifeng said, "Considering the artificial intelligence PC cycle and the update cycle of Microsoft Windows systems, we expect to show growth by 2024
PCs that support artificial intelligence refer to those equipped with advanced high-end chips that can run large language models and applications driven by them directly on computer devices rather than in the cloud. At present, although AIGC applications can be experienced on any PC or even mobile phone, they heavily rely on the network and cloud. In the future, AI PCs are expected to completely disrupt user experience and enjoy various applications and services offline locally.
In the quarter ended September, AMD's PC business achieved its strongest growth in two years. Intel's PC division's revenue decline was the smallest in eight quarters.
Justin Sumner, Senior Portfolio Manager at Voyage Investment Management, an institution that invests in both AMD and Intel, said, "Due to various impacts during the pandemic, such as remote work, the demand for the PC market has significantly decreased
And now, we are finally starting to see this trend bottoming out and rebounding. This should bring about typical inventory iterations and market improvements, "Sumner said.
Opportunities and challenges
PC manufacturers have been working hard to clear inventory as they expect demand to increase during the holiday season, and there are reports that Microsoft will launch a new operating system, Windows 12, next year and make more changes to its design for AI.
The data from research companies such as Canalys also fueled expectations of a recovery in the PC market. Canalys stated that after the slowdown in industry wide PC shipments in the third quarter, it is expected that the market will resume growth in the highly anticipated year-end holiday season.
The agency predicts that the adoption rate of AI enabled personal computers will accelerate from 2025, accounting for about 60% of total PC shipments by 2027.
However, some investors believe that the lack of artificial intelligence applications may hinder their widespread adoption. So far, Microsoft is the only large enterprise to launch such a product, and its GenAI driven Copilot software was launched on Wednesday for Microsoft 365 enterprise customers.
We are not yet sure if there are 'killer apps' that can stimulate this upgrade cycle, "said Dave Egan, senior research analyst at Threadneedle.