On January 8, 2026, Dell Technologies publicly admitted during the CES 2026 conference that its push for artificial‑intelligence‑enabled personal computers was not resonating with consumers. The statement, delivered in the morning session, marked a clear shift from the company’s earlier narrative that AI features would drive a new PC upgrade cycle.
Kevin Terwilliger, head of product, said, “What we’ve learned over the year is that consumers are not buying PCs based on AI. In fact, AI may be confusing them more than it helps them understand a specific outcome.” Chief Operating Officer Jeff Clarke echoed the sentiment, noting that the marketing around AI has been “confusing” rather than compelling, and that Dell will refocus on core attributes such as performance, battery life, and design.
The admission follows a broader industry trend in which consumers have shown fatigue toward AI hype. Dell’s AI‑PC strategy was intended to capitalize on Microsoft’s push for AI‑enabled Windows 11 devices, but the market response has been muted. The company’s executives explained that the AI narrative has not translated into purchase intent, prompting a reassessment of the product roadmap.
Financially, Dell’s Q3 FY25 results provide context for the shift. Client Solutions Group revenue fell 1% year‑over‑year, with consumer revenue down 18% and commercial client revenue up 3%. In contrast, Infrastructure Solutions Group revenue surged 58%, driven by strong demand for AI‑optimized servers. Gross margin for the quarter slipped 140 basis points, largely due to the higher mix of AI‑optimized server components and pricing pressure in the PC market.
Strategically, Dell is expected to reallocate resources toward its core infrastructure and server businesses, where it enjoys higher margins and robust growth. The company will also revive its XPS brand and emphasize traditional PC attributes, while still integrating AI capabilities such as NPUs into its hardware lineup.
In light of the admission, Dell lowered the midpoint of its full‑year FY25 revenue forecast, signaling caution about near‑term PC demand. The guidance adjustment reflects management’s assessment that the AI‑PC strategy will not deliver the expected upside, while the ISG’s strong performance provides a buffer for overall revenue growth.
The announcement was met with a negative reaction from investors, who expressed concern about the potential impact on the Client Solutions Group’s growth trajectory. While the company’s server business remains a bright spot, the lack of consumer enthusiasm for AI PCs introduces a headwind that could affect Dell’s long‑term revenue mix and margin profile.
Overall, the admission highlights a significant headwind for Dell’s PC segment and underscores the importance of aligning product innovation with clear consumer demand. The company’s pivot toward core hardware strengths and its continued investment in high‑margin server solutions position it to navigate the current market uncertainty while maintaining a focus on sustainable growth.
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