Citi Analysts Raise Concerns Over Weaker PC Market Recovery

Citi Analysts Voice Concerns About PC Market Recovery

Citi analysts have expressed significant concerns regarding the anticipated recovery of the PC market. Their insights, drawn from recent discussions with influential industry players, suggest that the recovery is not meeting expectations. Key organizations mentioned include Intel (NASDAQ: INTC), Dell Technologies (NYSE: DELL), and Western Digital (NASDAQ: WDC).

Recent Trends in PC Shipments

Despite a noticeable increase in August notebook shipments, which rose by 15% compared to the previous month, analysts urge caution about the overall health of the PC market. The uptick in shipments aligns with expectations following a sluggish performance in July. Citi's analysis indicates that although there are signs of growth, the optimism may be premature.

Cautious Outlook for Q3 2024

Citi forecasts a modest 4% increase in notebook shipments for the third quarter of 2024, which lags slightly behind the typical seasonal growth rate of 5%. This slower-than-expected growth can largely be attributed to persistent concerns over weak demand in the broader PC sector.

Inventory Challenges Ahead

Further complicating the outlook, Citi analysts noted that the inventory replenishment phase for PCs appears to have concluded. They warned that this could pose a mild headwind in the near term, affecting how quickly the market can rebound.

2024 Predictions and Trends

Looking forward to 2024, Citi projects a total of 256 million PC units to be shipped worldwide, marking a mere 1% growth year-over-year. This projection indicates a return to pre-pandemic levels, underscoring a significant shift where the surge in PC demand seen during the pandemic has largely diminished.

Positive Outlook for AMD

In the face of these challenges, Citi maintains a positive outlook on AMD (NASDAQ: AMD), continuing to recommend the stock with a Buy rating. Analysts forecast an earnings-per-share (EPS) of $2.60 for the company in 2024, slightly above the consensus estimate of $2.55. This could signal a strong performance ahead for AMD in a turbulent market.

Neutral Stance on Intel

Conversely, Citi has adopted a Neutral stance on Intel. Their projections indicate an EPS of -$0.36 for the same year, a slight improvement over the consensus estimate of -$0.43. This reflects the ongoing uncertainties within Intel's operational landscape and broader market challenges.

AI-Capable PC Shipments

Data from Canalys, a recognized technology market analytics firm, revealed that approximately 8.8 million AI-capable PCs were shipped globally in the second quarter. This figure represents 14% of all laptops and desktops shipped during that period. The incorporation of AI capabilities into PCs is becoming increasingly crucial as technology continues to evolve.

Overall Market Sentiment

While the improvement in August notebook shipments aligns with expectations and signifies short-term positive movement, the general sentiment within Citi highlights a cautious stance towards the overall PC market recovery. Analysts believe that despite some gains, the anticipated recovery is showing signs of losing momentum as broader trends in PC demand continue to fluctuate.

Frequently Asked Questions

What are Citi analysts concerned about in the PC market?

Citi analysts are worried that the recovery of the PC market appears weaker than expected based on their discussions with key industry experts.

What increase in notebook shipments was seen in August?

Notebook shipments in August rose by 15% compared to the previous month, aligning with expectations after a weak July.

What is Citi's forecast for PC shipments in 2024?

Citi predicts that 256 million PC units will be shipped in 2024, reflecting a modest year-over-year growth of only 1%.

Which stock does Citi recommend in the current PC market?

Citi recommends AMD (NASDAQ: AMD) with a Buy rating, forecasting an EPS of $2.60 for 2024, which is above consensus estimates.

What is the outlook for Intel according to Citi?

Citi maintains a Neutral rating on Intel, with an estimated EPS of -$0.36 for 2024, slightly better than the consensus estimate of -$0.43.

About Investors Hangout

Investors Hangout is a leading online stock forum for financial discussion and learning, offering a wide range of free tools and resources. It draws in traders of all levels, who exchange market knowledge, investigate trading tactics, and keep an eye on industry developments in real time. Featuring financial articles, stock message boards, quotes, charts, company profiles, and live news updates. Through cooperative learning and a wealth of informational resources, it helps users from novices creating their first portfolios to experts honing their techniques. Join Investors Hangout today: https://investorshangout.com/

Disclaimer: The content of this article is solely for general informational purposes only; it does not represent legal, financial, or investment advice. Investors Hangout does not offer financial advice; the author is not a licensed financial advisor. Consult a qualified advisor before making any financial or investment decisions based on this article. The author's interpretation of publicly available data shapes the opinions presented here; as a result, they should not be taken as advice to purchase, sell, or hold any securities mentioned or any other investments. The author does not guarantee the accuracy, completeness, or timeliness of any material, providing it "as is." Information and market conditions may change; past performance is not indicative of future outcomes. If any of the material offered here is inaccurate, please contact us for corrections.