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Dell and HP Struggle with Weak PC Demand Despite AI Growth

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Business Honor
27 November, 2024

Dell and HP's weak results highlight delayed PC recovery, despite Dell's growth in AI servers

Dell Technologies Inc. and HP Inc. reported a disappointing quarterly set of financial results, marking a slowdown in the personal computer (PC) market's recovery. The shares of both companies fell in extended trading after their earnings came in less than analysts expected.

Dell's PC revenue declined 1% to $12.1 billion in its fiscal third quarter, missing estimates. The PC business of HP managed to post a modest 2% rise to $9.59 billion, but it too was underperforming. According to Dell's Chief Financial Officer Yvonne McGill, the delayed cycle of refresh of PCs has pushed the recovery into next year. According to HP's CEO Enrique Lores, the new Windows software from Microsoft hasn't so far helped increase the corporate demand for PCs as rapidly as it had done earlier.

Instead, PC shipments fell in the third quarter after declining sharply after a pandemic-driven surge in 2020, according to IDC, an industry analyst. The hope was that the demand for the PCs optimized for artificial intelligence workloads would help lift the market. That has yet to come to pass, at least based on comments by Mikako Kitagawa, Gartner.

While PC fell, the overall business at Dell went up. Its infrastructure group, which includes servers, saw a 34% increase to $11.4 billion in revenue, mainly on account of its AI-optimized servers. The company's total revenue rose 10% to $24.4 billion and missed estimates.

Dell predicts its revenue for the following quarter to be around $24.5 billion, down from its previously estimated $25.4 billion. HP gave the market weak guidance also with its earnings estimate at 70 to 76 cents a share, significantly less than an analyst estimate of 86 cents. Outlooks of these two companies therefore portend that PC demand might not recover soon and stay weak.