The advent of AI-powered PCs has the focus of many on Wall Street as the AI race enters its second lap in 2024. "Our projection is that the penetration of the AI PCs will be between 40 and 60% three years after launch," HP Inc. CEO Enrique Lores (HPQ) stated in a previous interview with Yahoo Finance in November 2023.

Lores joins Yahoo Finance's Brian Sozzi and Julie Hyman at the World Economic Forum in Davos, Switzerland to give an update on HP's outlook on AI PCs and give insight into how the AI trend will continue to move forward.

When asked about how fast tech and AI is progressing, wondering if HP's upcoming tech will be obsolete just as fast, Lores responds: "Well, the hardware will not be different. The models will evolve and you will be able to upgrade the model and continue to use the same hardware, so I don't think that will be any concern for our customers".

It's all part of Yahoo Finance's exclusive coverage from the World Economic Forum in Davos, Switzerland, where our team will speak to top decision-makers as well as preeminent leaders in business, finance, and politics about the world’s most pressing issues and priorities for the coming year. Watch this full episode of Yahoo Finance Live here.

Editor's note: This article was written by Nicholas Jacobino.

Video Transcript

BRIAN SOZZI: Welcome back to "Yahoo Finance's" coverage at the World Economic Forum in Davos, Switzerland. And let's keep the AI conversation going. HP CEO, Enrique Lores is here. Enrique, good to see you, first of all.

ENRIQUE LORES: Good to see you, Brian.

BRIAN SOZZI: As always.

ENRIQUE LORES: Thank you.

BRIAN SOZZI: The epic AI PC-- when does it hit? And what in the world does it look like?

ENRIQUE LORES: It is coming this year.

BRIAN SOZZI: OK, it's coming?

ENRIQUE LORES: It's coming this year.

BRIAN SOZZI: OK, OK.

ENRIQUE LORES: And it's going to be really probably one of the biggest changes in the PC industry since the PC was invented more than 20 years ago. It will allow customers to run AI applications locally. So what today you need to do in the cloud with a large language model, you will be able to do that in the PC. And from a cost, security, and speed perspective, it brings a lot of advantages. So we are going to see a mix now of customers running AI on the cloud, but also many running AI locally.

JULIE HYMAN: So give us an example of what that looks like if I'm using my HP computer?

ENRIQUE LORES: Let me give you two examples. You-- let's say, you're a gamer. And you want to run your latest game that starts including generative AI in how some of the game is being performed. Today, you do it in the cloud. There is always a latency problem. And if you really want to win, it's difficult for you to win if you're using the cloud. If you run it locally, you will be able to get the advantage of GenAI with the right speed, so you can be the gamer you want to be.

Let me give another example on the business side. You are a small company. You want to use one of the large language models with your own data. And you are not going to be able to find and create your own private instance or ChatGPT because it's very expensive. You can run that model locally. Use the model with your own data. You don't need to upload the data. You don't have any security issues. And therefore, it is a big advantage.

JULIE HYMAN: How much more expensive is it-- are computers going to be with these abilities?

BRIAN SOZZI: I've been saving five years for this AI PC, Julie. Go ahead, Enrique.

ENRIQUE LORES: So we haven't announced final pricing, but we expect average selling price of PCs to be between 10% and 15%. So compared to the value they will bring is almost unknown.

BRIAN SOZZI: Won't they become obsolete faster? I've spent the whole week here, and AI is just changing. It's probably different today than it was four days when we came here on the ground. Won't I need a new PC the second I go and buy one of these?

ENRIQUE LORES: Well, the hardware will not be different. The models will evolve. And you will be able to upgrade the model and continue to use the same hardware. So it's-- I don't think that will be any concern for our customers.

JULIE HYMAN: And so what is the demand uptake going to look like? And also, I'm curious what the enterprise demand will look like for these PCs versus consumer demand, and what the flows will be like there?

ENRIQUE LORES: So what we expect is this is going to be gradual adoption. It's not like everybody is going to switch from the current PC to the new PC. Our expectation is that three years from now, between 40% and 60% of all PCs will be AI PCs. And we expect an even distribution between business customers and consumers, because we see benefit in both sides.

BRIAN SOZZI: We'll touch a third rail here, Enrique. One of your competitors, Xerox-- I'm sure you've heard of them-- laid off a bunch of people because they're not buying that company's printers. Now there's some challenges in your printer business. How committed are you to making printers? The dynamics of this industry have, at least to me, have structurally changed because of what happened during COVID.

ENRIQUE LORES: I mean, first of all, printing is and will continue to be a very important part of our business. We see a lot of innovation still in the printing space. Our printing business is different from other companies, has three different verticals.

We have a consumer printing business, so printers that you will buy to print at home. We have an office printing business, which is where Xerox is. And then we have an industrial printing business, printing labels, packaging, brochure, wallpaper. The different segments have different performance. Office printing is flat, home printing is declining, but industrial printing is growing. And therefore, we have a much more balanced printing business than any other printing company in the world.

BRIAN SOZZI: Well, when does it stabilize? Or just does it stabilize at a new level?

ENRIQUE LORES: We see it fairly stable now on the office side, which is what was impacted by the pandemic. Because we really think that the way of working in the future is hybrid. We think that employees love the flexibility of being able to work in the office, being able to work at home. And this is actually a very big opportunity for the company. We want to be the company that enables hybrid work-- hybrid work. And we do that because we offer the full portfolio of printers, PCs, cameras, video conferencing systems. Everything that is required to enable hybrid work, HP is going to be selling to our customers.