Lenovo, the largest computer maker by volume, broke a five-quarter losing streak on Thursday. The company reported $15.7 billion revenue for the quarter ended December 31, 2023, an increase of 3% compared to the same period last year. It is that Pursue The first year-over-year increase in sales since the end of 2022, surprising analysts who instead expected flat growth for the quarter.
Lenovo's personal computers generate about 80% of the company's revenue. But the PC market is in an expanded phase Burglarydue to macroeconomic headwinds and the End of the COVID-era work-from-home boom.
But despite the rise in profits, markets did not appear to welcome the news. Shares of the Beijing-based company fell as much as 8.5% in Hong Kong on Friday morning but eased throughout the day.
Shareholders may have been concerned about the PC maker's declining profits. The company reported quarterly net income of $337 million, a decline of 23% compared to the same period last year. A note from Citi analysts pointed to a subdued near-term outlook, including a possible delay in PC purchases by enterprise customers in the first half of the year.
What is an AI PC?
To drive demand, Lenovo is tapping into a popular trend: AI.
The company will begin shipping its first AI personal computers in the first half of the year, Luca Rossi, president of Lenovo's PC division, said Thursday. These devices have dedicated processors to complete generative AI tasks locally on the device rather than in the cloud. (Device makers including Lenovo are also exploring making smartphones that can handle AI tasks locally)
CEO Yang Yuanqing said PCs would be equipped with “a personal intelligent agent” and a “compressed local large language model.”
Importantly, CFO Wai Ming Wong noted that AI PCs could drive a new product cycle with premium pricing and represent a “watershed moment for the PC industry.”
But the triumph of AI PCs will probably be a while away. William Li, a senior analyst at Counterpoint Research, predicts that the “peak season” for these devices will not come until the second half of 2024 to 2025.
Lenovo is the latest technology company to strive to offer AI-related products and services. A recent one report Technology market research firm IDC predicts that over 167 million AI PCs will be shipped in 2027. Most AI PCs are sold to commercial buyers, but consumers may also be interested in applications for gaming and digital creation, IDC wrote.