Have you had it up to here with artificial intelligence?
Does the very mention of AI make you want to shout "oy vey" and hit your laptop with a Louisville slugger? Do you think this is all just a honking heap of hype?
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Well, TheStreet Pro's Chris Versace doesn't see it that way.
Versace gave his views on the subject while responding to a question during a video segment that suggested AI might be nothing but a load of BS.
"I really don't think that's the case," he said. "My position on AI has been that it's a lot like the Internet back in 1998-1999."
"There's a lot of noise, but it's what we see on the follow through with new applications that get us increasingly comfortable with AI--just like we saw with the Internet back then," Versace said.
He added, "We look at the number of headlines of companies embracing AI across a variety of sectors, so yeah, it kind of tells us that this is a real deal."
"But I would also say that if we consider the medium-to-longer term aspects of AI--just like the Internet--there are probably things that emerge that we haven't even thought of, so I remain excited for that," Versace said.
HP Inc. (HPQ) cited the impact of AI personal computers during the Palo Alto, California-based company's second-quarter earnings call Wednesday.
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HP CEO cites rising AI PC shipments
Industry analysts expect personal computer sales to rebound after two years of falling. Demand will be bolstered by factors such as aging PCs that have surpassed the four-year mark and demand caused by a migration toward Windows 11.
Integrating AI capabilities into PCs is expected to lead consumers and businesses to upgrade existing machines, too.
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HP Inc. CEO Enrique Lores said in a statement that HP "delivered a solid quarter and first half, and an innovative portfolio of solutions designed for the AI and hybrid era."
"As the market recovers and new AI PCs are introduced we are well-positioned to drive profitable growth across our business," he said.
Investors apparently liked what they heard. HP Inc. shares finished up nearly 17%to $38.36 on Thursday, May 30.
HP reported adjusted earnings of 82 cents per share, up from 79 cents a share a year ago and beating Wall Street estimates of 81 cents per share.
Revenue totaled $12.8 billion, down from $12.91 billion a year ago but ahead of analysts’ call for $12.59 billion in sales.
"We expect AI PCs to represent around 10% of shipments in the second half of this year, with a more significant impact in '25 and '26," Lores told analysts. "We anticipate AI PCs will account for 40% to 60% of our sales three years after launch, driving an improvement in average selling price of 5% to 10%."
In addition, HP is starting to see Windows 11 refresh in the funnel of opportunities from large enterprise customers.
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"Microsoft's public statements on costs to support previous operating systems have accelerated this process," Lores said. "Additionally, the aging installed base is contributing to the strength we are seeing in the Commercial side."
Revenue at HP's Personal Systems unit, which includes the company’s desktop and notebook personal computing products, rose 3.1% to $8.43 billion and exceeded forecasts of $8.28 billion.
Print revenue was down 8% year-over-year, with soft demand, particularly in China and parts of Europe.
HP Analyst sees 'robust execution'
Following the earnings announcement, several analysts reevaluated their price targets for HP Inc., and some noted the AI-PC connection.
JPMorgan analyst Samik Chatterjee raised the firm's price target on HP Inc. to $38 from $34 and kept an overweight rating on the shares.
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The analyst said the company's results "were uneventful on the relative variance" to sell-side consensus estimates but still represented robust execution to deliver to targets while the underlying end-markets in both PC and print remained under pressure.
Chatterjee said that he sees upside potential heading into fiscal 2025.
Citi raised the firm's price target on HP to $37 from $35 and maintained a buy rating on the shares following the earnings report.
The analyst tells investors in a research note that the results beat expectations, with PC revenue and margins much better than expected, while print underperformed slightly.
The firm said HP is making good operational progress and is on track to realize $1.6 billion in structural cost savings by fiscal 2025.
Wells Fargo analyst Aaron Rakers boosted the firm's price target on HP Inc. to $30 from $25 and kept an underweight rating on the shares.
Rakers said that he viewed HP's results as incrementally positive. The company reported improving commercial PC results and increasingly positive commentary around AI PCs/Windows 10 refresh and print stabilization in the second half of 2024.
TD Cowen raised the firm's price target on HP Inc. to $32 from $30 and kept a hold rating on the shares.
The firm said the second-quarter results were slightly ahead of consensus expectations. However, PS division revenue growth and second-half growth supported by new AI PCs and the broader Windows 11 refresh cycle were more encouraging.
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