The AI-driven PC upgrade cycle ‘seems to be on hold,’ Jim Cramer says

Jim Cramer Weighs In: AI-Driven PC Upgrade Cycle Delayed, But Not Forgotten

Artificial intelligence (AI) has been the buzzword of the tech world for years, promising to revolutionize industries and reshape the way we live and work. But when it comes to the much-anticipated AI-driven PC upgrade cycle, CNBC’s Jim Cramer says the wait continues. On Monday, Cramer shared his thoughts on the state of the PC market, noting that the AI-fueled refresh cycle many had hoped for hasn’t materialized yet, even though it’s been about four years since the last major upgrade phase.

“The big AI-driven PC refresh cycle seems to be on hold, even though they’re confident it’ll play out,” Cramer said, referring to companies that manufacture and sell PCs. “It sounds more like a normal upgrade cycle than anything revolutionary, which I’ve found to be a tad disheartening.”

Disappointing Earnings Reports from Major Players

Cramer’s comments come on the heels of recent earnings reports from three major consumer technology companies: Dell, HP, and Best Buy. Unfortunately, all three companies saw their shares decline after their earnings failed to meet Wall Street’s expectations. Despite this, Cramer expressed optimism about the quality of these companies, suggesting they deserve the benefit of the doubt.

“While the earnings reports were underwhelming, these are high-quality companies,” Cramer said. “I’m inclined to believe they’ll find their footing, even if the AI-driven PC upgrade cycle is taking longer than expected.”

Best Buy: A Mixed Bag

Best Buy’s latest earnings report largely disappointed, but there was a silver lining. According to Cramer, PC sales were a bright spot in an otherwise lackluster quarter. The company’s management noted that demand for newer PC models was driven by the need to replace aging devices, rather than a surge in interest for AI-powered features. While Best Buy executives expressed excitement about the potential of AI, they described its adoption as a “phased approach.”

“I’m glad Best Buy confirmed that there is a PC refresh cycle happening, even if it’s not yet driven by AI,” Cramer said. However, he cautioned that the stock is currently too expensive to recommend, especially with the looming threat of increased import tariffs.

HP and Dell: Enterprise Sales Outpace Consumer Demand

Both HP and Dell reported a noticeable gap between their consumer and enterprise PC sales, with enterprise sales outperforming consumer demand. Cramer praised Dell for its transparency about the challenges it faces. Dell’s management indicated that a PC refresh cycle is on the horizon, particularly with support for Windows 10 set to end next year. Additionally, Dell has exposure to the rapidly growing AI server market, which Cramer described as “red-hot.”

“Dell’s honesty about its challenges is refreshing,” Cramer said. “The end of Windows 10 support is a clear catalyst for a PC refresh cycle, and their involvement in the AI server space is a big plus.”

Is the AI-Driven PC Upgrade Cycle a Lost Cause?

Despite the slow pace of the PC upgrade cycle, Cramer remains optimistic about its eventual arrival. “Putting it all together, it’s clear that the PC upgrade cycle’s going more slowly than any of these companies would like,” he said. “But is it a lost cause? No way.”

While the AI revolution in the PC market may be taking longer than expected, Cramer’s analysis suggests that the industry is still moving in the right direction. The combination of aging devices, the end of Windows 10 support, and the growing importance of AI servers could eventually drive a significant upgrade cycle. For now, though, it seems patience is key.

Key Takeaways

• The anticipated AI-driven PC upgrade cycle has yet to take off, with demand currently driven by the need to replace older devices.
• Best Buy, Dell, and HP all reported underwhelming earnings, but their long-term prospects remain promising.
• Enterprise PC sales are outpacing consumer demand, and the end of Windows 10 support could act as a catalyst for future upgrades.
• AI adoption in the PC market is expected to be a phased process, rather than an overnight revolution.

As the tech world continues to evolve, all eyes will be on companies like Dell, HP, and Best Buy to see how they navigate these challenges and capitalize on the opportunities presented by AI. For now, the AI-driven PC upgrade cycle remains a work in progress, but the potential for a transformative shift is still very much alive.