While the world goes mad for AI, the humble PC is being left behind

Consumers aren’t rushing to buy “AI PCs”... yet.

11/29/24 7:00AM

Personal-computer companies HP and Dell have had a tough week, with both stocks down more than 10% on Wednesday after it became clear that people, and businesses, still aren’t buying PCs like they used to... even if they have the word “AI” in their name.

With so many other technology-enabled categories getting a boost from AI, some investors had hoped there might be a rose-tinted AI future for the two tech companies. Indeed, both Dell and HP shares rode some of the AI wave this year: Dell shares had gained 87% and HP was up 30% before the release of the Q3 reports. That optimism isn’t flowing through to results, with both offering gloomy forecasts for the rest of the year.

Recovery mode

After the peak in PC sales during the stay-at-home(-and-work) pandemic years, the industry saw a massive eight straight quarters of annual declines, per data from the International Data Corporation, as millions of people who might have gone out to buy a PC had already done so.

The market showed some green shoots of growth at the start of 2024 — a time when both companies began to double down on their AI initiatives. HP and Dell released plans for PCs that can do AI tasks on device hardware, rather than just connecting to AI tools via the internet, including HP’s so-called “the world’s highest performance AI PC”. Per Barron’s, some 15% of HP’s sales were AI PCs in their first quarter on the market — but they seem to be mostly replacing older hardware rather than driving net new demand. Dell’s chief operating officer said on the company’s earnings call that “the PC refresh continues to move out.”

So far, there doesn’t seem to be enough of a reason for consumers to shell out for a new AI PC. Instead, the “less sexy but arguably more important commercial refresh cycle” has been leading the industry’s performance in the background of the market’s AI PC hype, said Ryan Reith, vice president of IDC’s Worldwide Device Trackers.

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Palantir announces slew of defense- and security-themed partnerships

Defense, intelligence, and AI software company Palantir Technologies announced a series of security-themed partnerships Thursday, ahead of its annual conference promoting its artificial intelligence software platform (AIP).

Shares were recently up 1.7%, stretching the stock’s gains over the past month to 19%.

The deals include partnerships with uranium enrichment company Centrus Energy, jet engine maker GE Aerospace, unmanned aerial vehicle maker Ondas, and privately held World View, which sells intelligence and surveillance balloons that operate in the upper atmosphere.

Separately, it also announced a new “sovereign AI OS reference architecture,” a collaboration Palantir says “delivers customers a turnkey AI data center from hardware procurement to application deployment.”

Reference architectures are effectively blueprints that tell organizations how to set up and use AI hardware and software systems.

Known as the Palantir OS Reference Architecture, it’s based on similar AI blueprints Nvidia already sells, and it will enable customers to use Palantir’s entire product set, including the AIP and Foundry, its data organization and management product.