Global PC shipments were down 9% year over year in the third quarter, according to Gartner, marking the eight consecutive quarter of decline. While the PC industry was riding high during the first 18 months of the pandemic as consumers and businesses snapped up new laptops, elevated demand was not the new normal. PC shipments have since sunk well below pre-pandemic levels. About 64.3 million PCs shipped in the third quarter of this year, compared to 68.1 million in the third quarter of 2019.

The good news is that the pain is almost over. PC shipments rose in the third quarter compared to the second quarter, an indication that demand is likely bottoming out and that excess inventories are being whittled down. Gartner sees PC inventories back to normal by the end of the year, assuming that holiday sales aren't unusually weak. Year-over-year shipment growth is expected to return in the fourth quarter and continue into 2024.

Perfect timing for Intel's disruptive lineup

Intel (INTC 0.03%) has beaten back rival Advanced Micro Devices with its latest Raptor Lake chips, which feature a heterogeneous architecture with powerful cores mixed with weaker, more efficient cores. AMD's products are still plenty capable, and the company has a clear lead in gaming with its exotic 3D V-Cache chips. But Intel has been regaining market share over the past year thanks to Raptor Lake.

Through the end of 2024, Intel plans multiple product launches that could widen its lead. In the desktop CPU market, the company is reportedly planning a Raptor Lake refresh later this month. These products will bring incremental improvements, so they won't do much to change the story.

In the notebook market, Intel is set to launch its Meteor Lake chips in December. Meteor Lake is notable for being the first chips partially built on the Intel 4 process, the first PC chips from Intel built with a tile-based architecture that mixes and matches manufacturing processes, and the first PC chips from Intel with dedicated artificial intelligence hardware built-in. That's a lot of changes all at once.

Gartner expects the business PC market to soon begin a replacement cycle as companies upgrade to Windows 11. Consumers who bought new PCs in the early days of the pandemic will also start thinking about upgrading, although that process will play out over years. Laptops powered with Meteor Lake chips could be appealing, especially for those who make heavy use of software that would benefit from snappy AI performance.

One example is creative software for Adobe. Intel worked with Microsoft and Adobe earlier this year to enable multiple AI-powered features in Adobe Premiere Pro to be accelerated by the built-in AI hardware in Meteor Lake. By shifting these AI workloads to dedicated hardware, the CPU and GPU can be freed up for other tasks.

After Meteor Lake, Intel plans to launch Arrow Lake sometime in 2024. Arrow Lake will move to the Intel 20A process and use some advanced technologies like backside power delivery that should deliver impressive performance and efficiency gains. Lunar Lake is expected to follow much later in the year, with Panther Lake coming in 2025.

Ready for a comeback

The PC market isn't going to grow by leaps and bounds next year – Gartner expects 4.9% global shipment growth. However, Intel can grow its PC revenue faster for two reasons. First, the company can continue to win market share.

AMD has its own product launches planned for next year, so market share gains are far from a guarantee, but Intel has a lot of innovation and manufacturing improvements baked into its roadmap. If Intel successfully regains a manufacturing lead going into 2025, AMD will be at a disadvantage.

Second, notebooks with AI smarts could command higher prices that consumers and businesses are happy to pay. For any user of software that gets bogged down by heavy AI tasks, it could make sense to pay a premium for an AI-enabled Meteor Lake system.

The PC market was in decline in terms of shipments prior to the pandemic, and it's unlikely the long-term trend will be radically altered once the dust settles. But by winning back lost market share and shifting toward higher-value chips, the PC business could still be a source of growth for Intel.