HP CEO: First AI PCs Will Land In Second Half Of 2024, Adoption Will Take ‘Some Time’
Enrique Lores indicates that HP won’t brand its upcoming Meteor Lake-powered computers as AI PCs. Instead, the company plans to start marketing computers as AI PCs in the second half of next year using unidentified processors from Intel and other companies. And he expects adoption will ‘take some time.’
HP CEO Enrique Lores said the company’s first AI PCs will land in the second half of 2024, serve as a “catalyst for market expansion” and deliver “stronger AI capabilities” than upcoming computers powered by Intel chips promoted as a significant driver for AI PCs.
But while the leader of the PC and print giant believes AI PCs will lead to growth in the market, he expects it will take “some time” for customers to adopt computers with AI acceleration capabilities.
Lores made the comments in a Tuesday call with journalists and analysts about the Palo Alto, Calif.-based company’s fourth-quarter earnings for its 2023 fiscal year, which ended Oct. 31.
Intel CEO Pat Gelsinger has said that the chipmaker’s forthcoming Core Ultra processors, code-named Meteor Lake, will “usher in the age of the AI PC” due to their AI acceleration capabilities.
With Intel planning to hold a formal launch event for the Core Ultra chips on Dec. 14, HP will have the “widest range of PCs based on Meteor Lake’s platform,” which will become available starting in January and February as part of the company’s AI PC efforts, according to Lores.
However, Lores indicated that HP won’t brand its Meteor Lake-powered computers as AI PCs. Instead, the company plans to start marketing computers as AI PCs in the second half of next year using unidentified processors from Intel and other companies.
These systems HP deems as AI PCs “will be a catalyst for market expansion,” according to Lores, “and that, we think, will double PC growth rates over the next few years.”
On the call, Lores was asked about the difference between HP’s upcoming PCs powered by Meteor Lake and what it considers AI PCs coming out in the second half of next year.
He responded that Meteor Lake-based PCs will “have some AI capabilities” while PCs powered by Intel and other CPU providers coming in the second half on 2024 will have “stronger AI capabilities.”
“This is where we think the customers will perceive the real value of AI, though they will start seeing some value with Meteor Lake starting in January, February,” Lores said.
Asked if HP is concerned that customers may hold off from buying PCs with AI capabilities until the company releases its brand of AI PCs in the second half of 2024, Lores said he expects that the “penetration of AI PCs is going to increase gradually.”
“We don’t think the market will immediately shift to AI PCs. We think there will be some penetration in , stronger in , and even stronger in , so it will take some time,” he said.
In turn, Lores said he expects HP’s PC business to grow next year, though higher sales are expected in the second half of the year.
HP’s Q4 And Full-Year 2023 Financial Results
For the fourth quarter of HP’s 2023 fiscal year, the company reported $13.8 billion in revenue, which was down 6 percent year-over-year but 5 percent higher than the previous quarter.
Lores said HP’s key growth areas, such as hybrid systems from Poly as well as commercial services and solutions, “grew two times faster at 10 percent.”
Earnings per share for the quarter were 90 cents, which was in line with Wall Street’s expectations while the company’s revenue for the period was $40 million below analyst estimates.
HP’s personal systems net revenue was $9.4 billion, down 8 percent year-over-year. This was mainly due to a big slowdown in the commercial segment, where revenue was down 11 percent and where HP shipped 6 percent fewer units compared to a year ago. The consumer segment fared better, with revenue down 1 percent and units up 9 percent year-over-year.
The company’s printing net revenue was $4.4 billion, down 3 percent year-over-year. This was due to a 21 percent plummet in the consumer segment revenue, a 4 percent decrease in commercial segment revenue and 4 percent increase in supplies revenue.
These results contributed to an annual revenue of $53.7 billion for HP’s 2023 fiscal year, which was down 15 percent from the previous 12-month period.
“As you know this was a tough year due to demand constraints across the industry, but I am proud of the way our teams performed,” Lores said.
“We consistently improved results throughout the year. We also delivered on our structural cost savings, which is important because it allowed us to maintain our investments in innovation and growth,” he added.
HP forecasted that earnings per share will be in the range of 76 cents to 86 cents in the first quarter of its 2024 fiscal year, which began on Nov. 1. Earnings per share for the entire fiscal year is expected to be in the range of $3.25 to $3.65, according to the company.
The company’s stock price was down more than 3 percent in after-hours trading Tuesday.