A comprehensive report from Morgan Stanley indicates that the launch of AI-supported personal computers (PCs) by Microsoft last week marks the onset of a new era, potentially triggering an upgrade cycle for commercial PCs.

In the report, Morgan Stanley states, "We believe the commercial PC market will be the first adopters of AI PCs, as they are primarily marketed as tools to enhance productivity."

Furthermore, key factors expected to drive PC market growth in the second half of 2024 and 2025 include a 13% increase in the installed base of commercial PCs compared to pre-COVID-19 levels, and the cessation of support for Windows 10 next year.

Morgan Stanley's forecasts for the future adoption rates of AI PCs indicate that by 2024, these new computers will account for 2% of the total PC market and will steadily increase in the following years. It is anticipated to reach 16% by 2025, 28% by 2026, and 48% by 2027. By 2028, AI PCs are expected to occupy 64% of the market share.

According to a survey of Chief Information Officers (CIOs), 75% of CIOs in the United States and Europe are currently evaluating or planning to evaluate new AI PC products.

In fact, the PC market is experiencing a resurgence. While the overall growth rate of the PC market has significantly slowed in recent years, dropping from 343 million units in 2021 to 284 million units in 2022, further declining to 247 million units in 2023. However, despite subdued consumer PC demand, business demand began to recover in the first quarter of 2024, indicating a potential market revival.

AI PCs offer lower query costs, lower latency, infinite personalization, better accessibility, privacy, and security by directly implementing AI inference on devices.

According to the aforementioned CIO survey, respondents believe that as more workloads are handled through hybrid environments, the surge in AI PCs will reduce the percentage of AI workloads in cloud computing over the next three years.

Dell CEO Michael Dell recently noted that the cost of running AI inference on local devices is 75% more efficient than running it in the cloud.

Morgan Stanley indicates that major U.S. companies benefiting from the rise of AI PCs include Dell, HP, Apple, Qualcomm, Intel, NVIDIA, Arm, and Microsoft.