Intel warned of weak PC demand, blaming costlier memory chips, while corporate IT teams have less money for laptops. That could mean fewer business laptop sales for HP and Dell, with each machine costing more to build. Nothing in the last month argued the other way, but the main risk is that both pass memory costs on to buyers, as price increases kept their PC revenue growing through July.
Updated Oct 30
Computer Hardware
The reasoning of the connection that opened this thesis. It is not updated.
In July 2024, results from Alphabet and Tesla revived doubts about the returns on AI spending, and the Nasdaq fell more than 10% before recovering.
Dell's 58% revenue growth in the quarter to July 31 came mainly from AI servers, so PCs are a smaller part of its business than the headline suggests. Memory makers raising prices can also prompt buyers to order early, which would lift PC makers' sales for a quarter or two.
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Intel makes the main chip inside most laptops and desktops. When it expects to sell fewer of those chips, it is really saying PC makers plan to build fewer machines. That is why its weak outlook works like an early report on the whole PC business.
Intel's CEO pointed to higher memory prices, so each new laptop costs more to make or to buy. MarketWatch adds that company IT departments have smaller budgets for new laptops. Think of a bakery whose flour bill rises just as its biggest office customers cut their lunch orders.
HP Inc. and Dell build and sell those laptops, so they could feel both pressures at once. They pay more for the memory inside each machine. Their business customers may also buy fewer of them, which means less revenue and thinner profit on each sale.
Average move since Tenji added each name: +5.7% · S&P 500 since the thesis opened Oct 30: +0.5% · 1 of 2 names moving with the thesis
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