Lenovo, the world’s largest computer maker by volume, snapped a five-quarter losing streak on Thursday. The company reported $15.7 billion. income for the quarter ended December 31, 2023, up 3% from the same period a year earlier. It was the company’s first year-over-year increase in revenue since late 2022, surprising analysts who had instead expected flat growth this quarter.
Lenovo personal computers account for about 80% of the company’s revenue. But the PC market has suffered a prolonged decline due 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 8.5% in Hong Kong on Friday morning, although losses narrowed throughout the day.
Shareholders may have been concerned about the PC maker’s falling profits. The company earned $337 million in quarterly net income, down 23% from the same period a year ago. Citi analysts comment pointed on 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 artificial intelligence computer?
In an effort to boost demand, Lenovo is turning to a hot trend: artificial intelligence.
The company will begin shipping its first personal computers with artificial intelligence in the first half of the year, Luca Rossi, president of Lenovo’s PC division, said Thursday. These devices are equipped with dedicated processors to handle generative AI tasks locally on the device rather than in the cloud. (Device makers including Lenovo are also exploring the possibility of producing smartphones that can solve artificial intelligence tasks locally.)
CEO Yang Yuanqing said the PCs will be equipped with a “personal intelligent agent” and a “compressed local large language model.”
Importantly, CFO Wai Ming Wong suggested that AI-powered PCs could drive a new product cycle with premium pricing and could be a “game changer for the PC industry.”
However, the emergence of computers with artificial intelligence may take some time. William Lee, senior analyst at Counterpoint Research, predicts that the “peak season” for these devices will not occur until the second half of 2024 to 2025.
Lenovo is the latest technology company committed to providing artificial intelligence-related products and services. Recent report Technology market research firm IDC predicts that more than 167 million AI-powered computers will be shipped in 2027. Most AI-powered computers will be sold to commercial buyers, although consumers may also be interested in gaming and digital creativity applications, IDC writes.