Lenovo, the most important producer of computer systems by quantity, snapped a five-quarter-long shedding streak on Thursday. The corporate reported $15.7 billion in revenue for the quarter ending Dec. 31, 2023, a 3% enhance from the identical interval the yr earlier than. It’s the company’s first year-on-year enhance in income since late 2022, and stunned analysts that as an alternative anticipated flat development for the quarter.
Lenovo’s private computer systems generate about 80% of the corporate’s income. However the PC market has gone into an prolonged slump, attributable to macroeconomic headwinds and the end of the COVID-era work-from-home growth.
However regardless of the earnings beat, markets didn’t seem to welcome the information. Shares within the Beijing-based firm fell by as a lot as 8.5% in Hong Kong on Friday morning, although pared losses because the day went on.
Shareholders could have been involved by falling income on the PC maker. The corporate earned $337 million in quarterly web revenue, a 23% drop from the identical interval a yr in the past. A word from Citi analysts pointed to a muted near-term outlook together with a doable delay in PC purchases by enterprise prospects within the first half of the yr.
What’s an AI PC?
Lenovo is popping to a preferred development in its drive to spice up demand: AI.
The corporate will begin transport its first AI private computer systems within the first half of the yr, Luca Rossi, president of Lenovo’s PC division, mentioned Thursday. These gadgets have devoted processors to deal with generative AI duties regionally on the machine, fairly than on the cloud. (Devicemakers, together with Lenovo, are additionally exploring manufacturing smartphones that may deal with AI duties regionally)
CEO Yang Yuanqing mentioned that PCs would include “a personal intelligent agent” and a “compressed local large language model.”
Importantly, CFO Wai Ming Wong recommended that AI PCs may drive a brand new product cycle with premium pricing, and might be an “inflection point for the PC industry.”
But the rise of AI PCs may take some time to reach. William Li, a senior analyst at Counterpoint Analysis, forecasts that “peak season” for these gadgets to return solely within the second half of 2024 by way of to 2025.
Lenovo is the newest tech firm racing to supply services and products tied to AI. A current report from tech market analysis agency IDC predicts that over 167 million AI PCs will likely be shipped in 2027. Most AI PCs will likely be offered to industrial patrons, although customers may additionally be excited by functions for gaming and digital creation, IDC wrote.
