HP Inc. (HPQ.N) surpassed Wall Street forecasts for second-quarter revenue, suggesting a revival in the personal computer (PC) market as consumers begin to upgrade their systems. This marks a significant turn for HP, which, like other PC manufacturers, saw a surge in sales during the pandemic, followed by a two-year downturn.

The pandemic initially drove a boom in tech product purchases from consumers, businesses, and educational institutions. However, a prolonged slump ensued, which is now showing signs of easing. HP is poised to benefit from a wave of system upgrades, particularly after Microsoft (MSFT.O) introduced a range of new AI features designed for the latest generation of PCs.

In a recent interview with Reuters, HP Chief Executive Enrique Lores expressed optimism about the company’s trajectory, anticipating that approximately 10% of HP’s PC sales will consist of “AI PCs” in the second half of fiscal 2024. Lores emphasised that the impact of these AI-enabled PCs would be more significant in 2025. “Our fiscal year ends in October, so we are at the very beginning of this next-generation AI PC space,” he explained.

Education sector customers were a significant driver of sales in the second quarter, as schools upgraded their systems following a nearly two-year demand slump post-COVID-19. HP reported second-quarter revenue of US$12.8 billion, surpassing the analysts’ average estimate of US$12.6 billion, according to LSEG data.

Within the reported quarter, HP’s personal systems segment, which includes desktop and notebook PCs, saw a 3% increase in sales from the previous year. Conversely, the company’s printing segment experienced an 8% decline.

Looking ahead, HP has adjusted its profit expectations for fiscal 2024 to a range of US$3.30 to US$3.60 per share, up from its prior outlook of US$3.25 to US$3.65 per share. The midpoint of this range is US$3.45, slightly above analyst estimates of US$3.43.

As the PC market begins to rebound and new AI-driven innovations take hold, HP is strategically positioned to capitalise on these emerging trends, potentially leading to a stronger market presence in the coming years.