The PC industry's painful path to an AI future
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Intel sent investors scrambling with a stark warning about the sharpening slowdown in the personal computer market.
Why it matters: AI is helping fuel the slowdown — driving up the price of PCs and competing for crucial IT budgets — while causing an industry-wide rethink for what personal computers may look like down the road.
The big picture: The PCs most of us know today — used primarily for web browsing and running software — could look radically different in an AI-driven world.
- "How we think about the personal computer will very likely change," Nvidia CEO Jensen Huang said in June while unveiling a new chip platform for AI-powered Windows PC.
- Huang predicted that the PCs of the next decade would be almost unrecognizable compared with today's machines.
Zoom in: The vision is of computers that increasingly perform tasks for their owners, using AI agents that can navigate software, analyze information and complete work on their own.
- Some of that processing could happen locally rather than in the cloud, reducing costs and improving privacy.
That larger sentiment was echoed Thursday evening on Intel's earnings call.
- "We do think that the PC is going to go through a renaissance despite this [slowdown]," CFO David Zinsner said.
- "We think that as AI workloads start to shift around, there's going to be a lot of workload required in the client space, either as a PC or some kind of agentic box. And so we do see this market as being pretty interesting."
State of play: Today, PC sales are deteriorating quickly.
- Intel expects worldwide PC shipments to fall about 12% this year, followed by another roughly 10% decline in 2027.
- The company, which supplies processors to PC makers like Dell and HP, said Thursday that the pace of that PC "correction" has accelerated over the last two months, and predicted that the market over the next few quarters will be "challenging."
- It blamed the slowdown on shortages of memory chips, a factor of the AI data center boom, and limited business IT budgets, which have been under strain from rising AI spending.
The impact: Intel's stock plummeted over 28% Friday, while Dell, HP and Lenovo fell 10.7%, 9.6% and 7.4%, respectively.
The intrigue: PCs are already evolving.
- Intel's sales of processors for AI-capable PCs grew 35% in the third quarter compared to a year ago, even as revenue across its broader client computing business fell 5%.
- Lenovo says it has about a quarter of the global AI PC market and is developing personal AI agents designed to work across multiple devices.
- HP said AI PCs — which contain an integrated NPU for on-device AI — accounted for 46% of its unit shipments last quarter, a share the company expects to reach 60% to 70% next year.
The bottom line: "Before you get to the future you have to live through the present," Bernstein's Stacy Rasgon wrote Friday in a note about Intel.
- Those words could ring true for the entire PC industry, too.
