Source: Hard AI
Author: Zhang Yifan

Recently,$LENOVO GROUP (00992.HK)$,$Dell Technologies (DELL.US)$,$HP Inc (HPQ.US)$The three major AI PC vendors have successively disclosed their latest fiscal quarter reports.

• Lenovo's results show that, driven by AI, the Group's revenue increased by 9.5% in the current quarter, doubled net profit, and predicted potential orders for AI servers worth 7 billion US dollars. The stock price increased 9% after the meeting;

• HP also benefited from AI, with net profit of $0.82 per share, up from the same period last year. The CEO said that in fiscal year 2024, up to 10% of HP's sales will come from AIPC, and the stock price will rise 12% to a new high;

The AI server in the Big Three PC companies boosted market expectations, but instead fell short of expectations. AI performance was poor this quarter, and profits did not increase but fell. As a result, it once plummeted by more than 17% before the market, but now the decline is 13.5%.

1. Earnings fell short of expectations, and Dell's stock price plummeted

Dell's latest quarterly results will show that both the storage business and operating profit fell short of market expectations.

1) Storage revenue falls short of expectations

Storage remained the same as the previous quarter, with no growth, far below market expectations of 18% growth.

The company previously revealed at an exchange meeting ——

“Every $1 in AI servers brings the company $2 in services, storage, and other higher-margin businesses.”

Considering that AI server shipments this quarter increased by 1.7 billion US dollars compared to the same period last year, according to the company's previous estimates, storage revenue from supporting AI server shipments should have increased significantly over the same period last year.

However, actual operating data showed no change in storage business revenue, far below the 18% increase expected by the market before the meeting.

Furthermore, the AI server supply chain shows that HBM and DDR memory are in high demand due to AI catalyzed supply, and Dell has not seen any significant changes in revenue under this wave of storage shipments.

2) Profit falls short of expectations

AI server shipments increased by 1.7 billion US dollars compared to the same period last year, but profits did not increase but fell, far below the 17% increase expected by the market.

Analysts raised questions at the results meeting —

According to data disclosed by the company, the AI server business grew from 0 to 1.7 billion US dollars, while traditional servers and storage servers remained at the same level as the previous quarter.

This means that the real change in the entire ISG business this quarter was the addition of 1.7 billion US dollars in AI servers.

However, despite the increase in revenue of 1.7 billion US dollars, operating profit remained the same as the previous quarter. Analysts asked whether this meant that the AI server's operating profit margin was actually zero.

Although the company responded that “large customers and large orders led to lower profit margins,” judging from the sharp drop of 20% after the market, the market did not accept this statement.

2. Micron adds plans to expand DRAM production

According to Japanese media reports,$Micron Technology (MU.US)$It is planned to build a new DRAM chip manufacturing plant in Hiroshima Prefecture, Japan, with the goal of being put into operation as soon as the end of 2027.

Following Micron's HBM3E memory passing$NVIDIA (NVDA.US)$After verification, the market kept an eye on Micron's production expansion trend.

Goldman Sachs predicts that in 2024, Micron's HBM production capacity will increase 203% year over year, and production capacity growth will continue until 2026.

However, at this month's results meeting, Micron did not disclose DRAM related capacity expansion plans; it only mentioned that it would consider market supply and demand and plan production capacity according to demand to prevent oversupply in the market.

Maybe it's because HBM demand is too intense.

Recently, Japanese media revealed that Micron plans to build a DRAM factory in Japan. The total investment scale of the new plant is estimated at 600 billion to 800 billion yen (about 5.1 billion US dollars). Construction is scheduled to begin in early 2026 and will be equipped with extreme ultraviolet lithography (EUV) equipment.

Additionally, the Japanese government has approved subsidies of up to 1920 billion yen (about 1.3 billion US dollars) to support Micron's production of next-generation chips at its Hiroshima plant.

The Japanese plant is another new plant added by Micron after building plants in the US and India in recent years.

3. AI enables pathological detection

The analytical advantages of AI in the fields of data, images, and video can help doctors diagnose diseases more accurately and quickly.

Recently, Goldman Sachs released an “AI+ Pathological Testing” report and predicts that by 2030, the total target market for digital pathology will reach about 1 billion US dollars, and by 2035 it will reach about 3 billion US dollars.

The report mentioned that in the past, pathological analysis relied on pathologists using microscopes to examine tissue samples; however, this method is facing challenges due to a shortage of pathologists and the increasing amount of data from various sources such as digital images and patient records.

Digital pathology, on the other hand, can transform an image on a slide into a digital image, which is achieved by using a scanner to create a “full-field digital scan” or WSI.

The report highlights the potential of AI to improve the efficiency and accuracy of pathology workflows. For example, one study found that AI algorithms were much more accurate in detecting metastases in lymph node samples (92% versus 73% sensitivity) compared to human pathologists.

Furthermore, Paige, which focuses on “AI+ healthcare”, has developed an artificial intelligence system approved by the FDA specifically for prostate cancer. The system also achieved impressive results: 99.3% sensitivity, 70% reduction in cancer detection errors, and 65.5% reduction in diagnosis time.

Goldman Sachs stated,$Guardant Health (GH.US)$,$Veracyte (VCYT.US)$und $NeoGenomics (NEO.US)$Companies such as these may benefit from this growth, as they have advantages in the WSI digital library, artificial intelligence analysis technology, and biopharmaceutical services business.

Editor/jayden