On May 27th, Lenovo's (0992.HK) stock price rose more than 10% intraday, reaching 12.26 HKD per share, the highest since June 2015. As of May 30th, Lenovo's stock price is still performing well. Major institutions such as Morgan Stanley, Goldman Sachs, and CLSA have expressed optimism about Lenovo Group, believing that the trend of AI PCs will bring significant upside potential for the company's stock price. This is because Lenovo, with its self-developed AI chips, most comprehensive AI features, and AI assistant, will become one of the biggest beneficiaries of the AI PC market.

（Source：uSMART,2024.05.30）

What is AI PC?

Although the term "AI PC" is a new one, the industry does not have a clear definition of it yet. But in essence, an AI PC is a computer with generative AI capabilities, using AI to augment or enhance the functions of a PC, allowing users to complete tasks without relying on cloud-based AI applications, but on the device itself. As the trend of generative AI continues to spread, the applications have gradually expanded from initial hardware and software upgrades, such as AI servers and ChatGPT models, to consumer end applications like AI PCs and AI smartphones. Smartphone AI applications have already developed functions like automated photography and lighting adjustment, but for PC products, this represents a brand new imaginative space.

According to the definition given by Canalys, truly meaningful AI applications on computers must prioritize factors such as real-time response, low latency, and security. Therefore, an AI PC must be equipped with a specialized chip or module designed to accelerate AI computing tasks. So you can understand an AI PC as a personal computer that is equipped with a chip or module specifically designed for AI acceleration, and can run local AI service functions.

Current state of the AI PC market

According to statistics from Yahoo Finance, the global PC market size was around $187 billion in 2023, and is estimated to rise to about $289 billion by 2028, with a compound annual growth rate of 9.1%. Other research institutions also generally believe that the PC industry's output value will have a compound annual growth rate of 5-10% over the next 5-10 years. Currently, the top 5 PC market share leaders are Lenovo, HP, Dell, Apple, and Asus.The following chart shows the market size status of PCs.

（Source：Yahoo Finance，2024.05.23）

Starting from 2020, people gradually developed the habit of remote work, leading to an increase in PC shipments to 302 million units, with a year-on-year growth of 13.1%; by 2021, it further rose to 348 million units, with a year-on-year growth of 14.8%.

However, as the pandemic gradually receded, the global demand for home scenarios decreased from 2022, leading to a slump in demand, and PC market shipments began to decline to 292 million units. In 2023, due to inventory backlog and price wars among PC manufacturers, consumer demand did not pick up, and the PC market remained sluggish, with annual PC shipments of 259 million units, a year-on-year decrease of 13.8%.

（Source：IDC. Shipments are in millions of units.，2024.04.12）

Against this backdrop, the entire PC industry is looking for a second growth curve, and the epoch-making "AI" naturally becomes the "savior" they are pinning their hopes on, with AI PCs expected to usher in a super cycle of PC replacement.

Future Development of AI PCs

According to data from the research firm Canalys, AI PCs will become mainstream products in the market by 2025, accounting for more than half of overall PC sales in 2026, and reaching a shipment ratio of 60% by 2027, which means that out of every 3 laptops, 2 will be AI PCs. Moreover, Canalys' research team points out that the hybrid of cloud computing and device-end computing will enhance users' productivity and creativity, and maximize efficiency, security, and personalization, driving the advent of the AI PC era. The following chart illustrates the sales status of AI PCs.

（Source： Canalys，2024.05.23）

Major manufacturers are positioning for AI PCs

In the face of the historic opportunity of AI, major manufacturers are vying for layout. From an industrial chain perspective, it can be divided into chip companies and terminal computer manufacturers.

● Chip Companies

1. Intel (INTC)

As one of the most established computer chip manufacturers, Intel is also one of the first chip manufacturers to start deploying AI PCs. In September last year, at an event held in Silicon Valley, Intel CEO Pat Gelsinger proposed the revolutionary concept of "AI PC".

In mid-December 2023, Intel officially released the new Core Ultra mobile processors configured for AI PCs. The company claims that this generation of chips represents the biggest architectural shift in the company's 40-year history.

2. Qualcomm (QCOM)

Qualcomm, which has always been one of the leaders in mobile phone chips, was also actively deploying AI PCs last year.

In October 2023, at the Snapdragon Summit held in Hawaii, the company also released the Snapdragon X Elite platform specifically built for PCs. The uniqueness of this chip lies in its adoption of the Oryon CPU architecture. Qualcomm claims that its chips are faster than Apple's M2 Max chips in certain tasks and more energy-efficient than both Apple and Intel.

PCs equipped with the Snapdragon X Elite are expected to hit the market in mid-2024.

3. Advanced Micro Devices (AMD)

As the second giant in the PC CPU field, AMD has also taken action.

In December 2023, AMD announced the latest developments in its AI PC-related field, releasing the next-generation Ryzen 8040 series processors. This processor is equipped with the Ryzen AI NPU module, which is 1.6 times more powerful in AI performance than previous models.

AMD stated that the Ryzen 8040 series processors have already begun shipping. New machines equipped with Ryzen 8040 series from major OEMs such as Acer, ASUS, Dell, HP, Lenovo, and Razer are expected to hit the market starting from the first quarter of 2024.

4. Nvidia (NVDA)

Before the outbreak of generative AI, Nvidia's largest market has always been the "gaming" segment on the PC side.

At the CES conference in early 2024, Nvidia finally made a big move, releasing a plethora of new AI applications and GPU products for PCs, including the GeForce RTX 40 SUPER series graphics cards, NVIDIA AI Workbench, the open-source TensorRT-LLM, and NVIDIA ACE microservices driven by generative AI for voice and animation models.

It is said that the GeForce RTX 40 SUPER series graphics cards will be equipped in products from manufacturers such as Acer, ASUS, Dell, HP, Lenovo, MSI, Razer, and Samsung, and are planned to go on sale starting from January 2024.

● Terminal Computer Manufacturers

1. Lenovo (LNVGY)

Lenovo is one of the earliest manufacturers to deploy AI PCs.

In mid-December 2023, Lenovo has already launched three brand new AI PCs. These new machines are the Lenovo ThinkPad X1 Carbon, ThinkPad X1 2-in-1, and IdeaPad Pro 5i, all of which are equipped with the latest Intel Core Ultra processors and the Windows 11 system.

2. HP Inc (HPQ)

HP, although it has also made some deployments, its new product launch is a bit later. The company plans to launch its first AI PC in the second half of 2024.

Although HP believes that AI PCs will drive market growth, they think customers will need some time to adopt computers with AI acceleration capabilities.

3. Dell Technologies (DELL)

Although Dell is famous for producing personal notebooks and computer monitors, the company also manufactures server racks and other enterprise hardware.

Dell has also made deployments in the field of AI PCs. On January 4, 2024, Dell launched three brand new AI PC products: XPS 13, XPS 14, and XPS 15. These new models are all equipped with Intel's Intel Core Ultra processors.

AI PC concept stocks rise

After the AI PC concept craze hit the Hong Kong stock market, on May 30th, some related concept stocks bucked the trend and rose. Among them, Sunny Optical Technology (02382.HK) was the standout performer. Against the backdrop of the overall Hong Kong stock market declining, the company's stock price defied the trend and surged nearly 7% at one point.

（Source：Sina Finance，2024.05.30）

Sunny Optical Technology is a company that focuses on the production of optical components and products, with its products widely used in areas such as smartphones, automotive lenses, AR/VR, and others. As consumer demand for enhanced features like AI assistants and on-device processing grows, the AI smartphone market is expected to see a significant compound annual growth rate. As a leading enterprise in the optical field, the company is poised to benefit from this trend.