HP's performance is poor, but it is embracing artificial intelligence!

HP announced its lowest quarterly revenue since the outbreak of the pandemic, reflecting the continued weakness of the personal computer market.

However, HP said it expects the market to improve in the second half of this year and that it will play a key role in the artificial intelligence market in the future.

Embracing Artificial Intelligence

HP CEO Enrique Lores said that artificial intelligence will fundamentally change the PC industry, especially HP itself.

"We are very clear that we will focus on what we can control and invest in businesses that drive innovation and long-term growth."

"We do believe there is an opportunity to create a new category of PCs that will drive significant refreshes of that category," Lores said. "AI will help us redefine what a PC is and the experience customers can expect, and we are working with all major software and silicon suppliers to redesign the architecture of the PC."

Lores said that HP is developing AI-enabled PCs that will allow customers to build spreadsheets and analyze data in a matter of seconds. Artificial intelligence will be able to create spreadsheets, analyze data, and even engage in conversation about its findings in a matter of seconds. This type of personal computer is expected to appear in 2024.

Lores added that HP has been working with AMD, Qualcomm, and Nvidia to develop new architectures.

PC Demand Slump, Reducing Inventory

For the second quarter ending April 30, HP's revenue was $12.9 billion, down 21.7% year-on-year. Wall Street's general expectation was $13.1 billion.

HP's first-quarter non-GAAP earnings per share were 80 cents, in the middle of the 73-83 cents guidance range, higher than Wall Street's expected 76 cents.

First-quarter personal computer sales were $8.2 billion, down 29% from the same period last year, about $200 million lower than Wall Street's general expectation.

However, Lores said that HP has made significant progress in reducing channel inventory, a process that should be completed in the third quarter.

In addition, HP had been actively buying back shares, but did not buy back any shares this quarter. Lores said that HP is currently at a high level of its target leverage ratio, but he expects HP to resume buying back shares in the fourth quarter.