The Tech Twilight Zone: Tablets Are Falling and PCs Are Rising

By Michael Comeau  JUN 13, 2014 11:20 AM

Intel raised its second-quarter and full-year guidance on a rebound in PC demand.


This article was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Tablets are weak [subscription required] and PCs are strong? Are we living in the Twilight Zone?

Yesterday after the close, Intel (NASDAQ:INTC) raised its second-quarter and full-year revenue, and gross margin guidance, "driven mostly by higher PC unit volume." Business PCs are seeing strong demand, echoing comments from [subscription required] Hewlett-Packard (NYSE:HPQ) a few weeks ago.

Could the Microsoft (NASDAQ:MSFT) Windows 8 cycle finally be here?

I doubt it. This is more likely PCs simply being worn out.

Here's a tabulation of recent global PC industry unit growth trends:

With essentially no real upgrade cycle since 2010 (the year the Apple (NASDAQ:AAPL) iPad began disrupting the traditional PC market), there are a lot of computers that need replacing.

This is good news for a wide variety of industry players up and down the supply chain -- everyone from Microsoft to H-P to Western Digital (NYSE:WDC) to Nvidia (NASDAQ:NVDA).

Ideally, we'll see a complementary bounce back in consumer PC demand during the back-to-school and/or holiday seasons.

If tablets have peaked in terms of taking share from traditional laptops, then they, too, could be long overdue for an upgrade cycle.

Twitter: @MichaelComeau

Position in AAPL

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.