HP Inc. (HPQ) CEO Enrique Lores said consumers and businesses are poised to see big changes to their computers within 24 months due to new advances in artificial intelligence.
“What we’re working on is building AI capabilities into the PC,” Lores told analysts on an earnings call Tuesday night. “This way, consumers or professionals will be able to run AI applications at the edge and not have to run them on the cloud.”
“The benefit this will bring is that if you’re a small business and you want to use some of your private data in an AI application, you won’t have to download it, you can run it locally. And there too will be cost benefits and latency benefits,” he said.
Lores added that HP is working closely with chipmakers to integrate new AI designs into its computers.
The efforts will soon be evident, Lores said.
“It’s going to be a big shift. Customers will start seeing some of these solutions available in 2024 in about 12 months, 20 months from now, and it’s going to be a huge opportunity to really bring energy to the category.” , explained Lores.
A high dose of energy is sorely needed in the IT market.
HP has seen unit sales under pressure in its PC and printing segments over the past quarter as businesses and consumers continue to tightly manage their finances post-pandemic.
Fiscal second-quarter net sales plunged 21.7% from a year earlier to $12.9 billion, just below estimates of $13.03 billion. Sales in the personal systems (PC) segment fell 29% from the year-ago period, missing analysts’ estimates by about $200 million. Print sales fell 5% year over year.
Thanks to HP’s various cost-cutting efforts over the past year, both companies’ margins have managed to stay intact.
HP shares fell about 5% in premarket trading on Wednesday as investors were stuck on falling units in PCs amid a slowing economy.
But the potential for the first half of 2023 to hit rock bottom for PC makers like HP is somewhat overlooked.
Amid the rise of AI, consumers and businesses will likely need to refresh their pandemic-era PCs to stay competitive.
PC shipments in the United States in the fourth quarter of 2023 are expected to increase 6% year on year, according to new data from industry researcher Canalys. Full-year 2024 shipments are expected to be 13% higher than 2023.
Wall Street sees this refresh cycle as an inevitable tailwind for HP.
“We consider management’s commentary on the earnings call around much lower inventory levels to work downside as well as a seasonal rebound in PC volumes led by consumer demand to be broadly consistent with our own verifications, and we expect the seasonal upside to follow as long as there is no further deterioration in the macro economy,” JP Morgan analyst Samik Chatterjee said in a research note. .
Chatterjee added, “The higher installed base of PC volumes and the robust replacement cycle, with priority given to high-end features on PCs, further strengthen our confidence in the volume projections.”
Brian Sozzi is the editor of Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Advice on the banking crisis? Email brian.sozzi@yahoofinance.com
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