(Reuters) – Shares of Dell and HP fell on Wednesday after the personal computer makers made predictions that cast doubt on a market recovery powered by PCs with artificial intelligence.
Dell fell 13% in pre-bell trading, with the company set to lose nearly $13 billion of its $99.50 billion market value, after forecasting quarterly revenue below estimates.
HP fell 9% and its market capitalization is expected to shrink by more than $3 billion from $37.68 billion on Tuesday, after a quarterly profit projection that fell short of market views.
Demand for traditional PCs has weakened after a post-pandemic boom, while AI-powered computers have yet to see mass adoption, despite some interest from business and education.
“We have long warned that we did not expect artificial intelligence personal computers to lead to a structural change in PC demand, and we think this may be what disappointed the market,” said Morningstar analyst Eric Compton.
A computer upgrade cycle resulting from Microsoft’s end of support for Windows 10 and the transition to Windows 11 is also expected to boost new PC sales. However, adoption of the latest operating system is slower than expected.
“As the Windows 11 refresh is slower than previous industry transitions, we expect the impact of the upgrade to be greater in 2025,” said HP CEO Enrique Lores.
For Dell, the AI server business remained a bright spot, with revenue in its servers and networking unit rising 58% thanks to demand for its servers from cloud companies racing to capitalize on AI.
The boom in the server market has sent Dell shares up 85% this year, outperforming a 30% rise in HP Inc and HP Enterprise.
But some analysts warned that a slow rollout of Nvidia’s next-generation AI chip could hurt Dell’s sales.
HP shares trade at 10.84 times analysts’ earnings estimates, compared to 15.51 for Dell and 30.94 for Microsoft.
(Reporting by Akash Sriram in Bengaluru; Editing by Maju Samuel)
