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 income for the quarter ending Dec. 31, 2023, a 3% enhance from the identical interval the 12 months earlier than. It’s the corporate’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 stoop, resulting from macroeconomic headwinds and the top of the COVID-era work-from-home increase.
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 might have been involved by falling income on the PC maker. The corporate earned $337 million in quarterly internet earnings, a 23% drop from the identical interval a 12 months in the past. A notice from Citi analysts pointed to a muted near-term outlook together with a potential delay in PC purchases by enterprise prospects within the first half of the 12 months.
What’s an AI PC?
Lenovo is popping to a well-liked pattern 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 12 months, Luca Rossi, president of Lenovo’s PC division, stated Thursday. These units have devoted processors to deal with generative AI duties domestically on the system, reasonably than on the cloud. (Devicemakers, together with Lenovo, are additionally exploring manufacturing smartphones that may deal with AI duties domestically)
CEO Yang Yuanqing stated that PCs would include “a private clever agent” and a “compressed native giant language mannequin.”
Importantly, CFO Wai Ming Wong steered that AI PCs might drive a brand new product cycle with premium pricing, and might be an “inflection level for the PC business.”
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 units to come back solely within the second half of 2024 via 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 probably be shipped in 2027. Most AI PCs will probably be offered to industrial consumers, although customers may also be thinking about functions for gaming and digital creation, IDC wrote.
