(Reuters) – Shares of Dell and HP fell on Wednesday after personal computer makers issued forecasts that cast doubt on a market rebound driven by artificial intelligence-enabled computers.
Dell fell 13% in trading before the bell, with the company set to lose nearly $13 billion of its $99.50 billion market value, after it forecast quarterly revenue below estimates.
HP fell 9% and its market value is set to shrink by more than $3 billion, from $37.68 billion on Tuesday, after quarterly earnings forecasts fell short of the market’s vision.
Demand for traditional computers has weakened following the post-pandemic boom, while AI-powered computers have yet to see mass adoption despite some interest from the corporate and education sectors.
“We’ve long cautioned that we didn’t expect AI-powered PCs to lead to any structural change in demand for PCs, and we think that’s probably what the market has been disappointed by,” Morningstar analyst Eric Compton said.
The PC upgrade cycle, spurred by Microsoft’s end of support for Windows 10 and the transition to Windows 11, was also expected to drive sales of new PCs. However, adoption of the latest operating system has been slower than expected.
“With Windows 11 updating slower than previous industry transitions, we expect to see the impact of the upgrade more pronounced in 2025,” HP CEO Enrique Llores said.
For Dell, its AI server business continued to be a bright spot as revenue from its servers and networking unit jumped 58% thanks to demand for its servers from cloud companies racing to leverage AI.
The boom in the server market has helped Dell shares rise 85% this year, outpacing the 30% rise in HP Inc and HP Enterprise shares.
But some analysts have warned that the 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)
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