PC market recovery gathers pace as Intel and AMD tout ‘PC AI’ potential

Nov 1 (Reuters) – Results from Intel (INTC.O) and Advanced Micro Devices (AMD.O) provided further evidence that the recovery in the personal computer market is gaining momentum, boding well for an industry that has struggled with oversupply after the pandemic.

This week, executives from both companies discussed the stabilization of the PC market on earnings calls and said they expect the integration of artificial intelligence to spur growth.

“The advent of AI-enabled PCs represents a turning point in the personal computing industry,” said Intel CEO Pat Gelsinger. AMD CEO Lisa Su said she “expects some growth in 2024 given the type of AI PC cycle and some of the (Microsoft) Windows refresh cycles.”

AI-enabled PCs are machines with advanced chips that can run multilingual AI-based models and applications directly on the device, rather than in the cloud.

In September, AMD’s PC division posted its strongest growth in two years. Intel’s PC unit’s revenue decline was the slowest in eight quarters.

“There has been a significant increase in demand in the PC market due to all kinds of impacts of the pandemic (such as remote work),” said Justin Sumner, senior portfolio manager at Voya Investment Management, an investor in both AMD and Intel.

“We are finally starting to see the bottom of this trend. This should lead to a typical refresh of stocks and an improvement in the market situation.”

PC makers are trying to clear their inventories, anticipating a surge in demand over the holiday season and ahead of next year’s expected Windows update from Microsoft (MSFT.O).

Data from research firms such as Canalys confirmed these expectations. After a slower decline in PC shipments across the industry in the third quarter, Canalys said it expects the market to return to growth during the long-awaited holiday season.

It expects the adoption of AI-enabled computers to accelerate from 2025 and account for approximately 60% of all computers shipped in 2027.

Still, some investors see the lack of AI applications as a potential barrier to adoption. Microsoft is the only major company so far to create such offerings with its genAI-powered Copilot software, which was made available Wednesday to enterprise customers using the Microsoft 365 platform.

“It’s still not clear to us whether there is a ‘killer app’ that will speed up the update cycle,” said Dave Egan, senior research analyst at Columbia Threadneedle, an investor in both AMD and Intel.

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