Ben Reitzes : I appreciate it. I wanted to ask about PCs with regard to your comments around 2025. What is — are you expecting that growth to be above model? And what do you think the impact will be of the Windows 10 expiration and some of the new chips coming out that harness AI? If you don’t mind touching on that, that would be great.
Jeff Clarke: Sure. Let me take a run at it, Ben. It probably is important to set context as we’re heading into calendar ’24, our fiscal ’25 in PCs. We expect the market to close in Q4 being down. It will be 8 quarters of negative growth in the PC industry, the longest I can recollect. And it’s ripe for a refresh. Another data point for you to think about. There’ll be 300 million PCs turning 4 years old next year. That’s typically a tipping point for upgrading in commercial. And most of those are notebooks. As everybody was working remote, the notebook mix went up, 300 million PCs that year, they’re aging in time to refresh. And we have the opportunity with new architectures from Intel, AMD and Windows on Arm to really begin to see AI make its way out to the edge to the PC.
And it’s a pretty exciting time. I’ve used the moniker, the notion of this is the next great application, the next great use case of the greatest productivity device on the planet, and it’s coming real next year. So I think 8 quarters of decline, an aging installed base and installed base of greater than 1.5 billion units, 750 million of them over 4 years, all 300 million more coming next year. That will age to become 4 years old, the time to upgrade. None of those are capable of running the new AI workloads coming out to the edge and the PC, new architectures coming that are exciting and interesting. And we have what you said around Windows. There’s another forcing function of an upgrade. So historically, when a new version of Windows is available or 1 is retired, that drives a replacement cycle, and that’s an opportunity for us.
So we’re excited about that, particularly given our bias towards commercial. 80% of our revenue comes from the commercial PCs. I think the opportunity is good for us. And then the other question was around the silicon alternatives. Is that it, if I remember correctly?
Ben Reitzes : I think you hit on everything. I just — the clarification is just PC is above — or PC is also above model, as well as server and ISG. That’s probably the final…
Jeff Clarke: Specifically, our internal model would have the PC market growing somewhere in the low single digits, think 3% to 4%, you would expect us to grow to take share.
Rob Williams: Thanks, Ben. Next question?
Operator: We’ll take our next question from Asiya Merchant with Citi.
Asiya Merchant : A couple of questions on my end. Just on the AI opportunity that you talked about in the enterprise, maybe if you could share with us the workloads and the use cases that you’re now seeing, is this gone beyond the cloud service providers that you talked about that you’re interacting with? I think you mentioned CoreWeave and Imbue on the call. But if I recall, there was some commentary as well on enterprises. So are you seeing an opportunity for your AI pipeline growing with the enterprise use cases? If you can share any anecdotes on that? And then on share buybacks, obviously, you kicked that up this quarter? Should we expect this level of share buybacks to continue into fiscal ’25? Or given improving cash conversion cycles, improving top line, we should see a further step-up in that run rate?
Jeff Clarke: Sure. I’ll lead with the AI question. A couple of maybe specific data points to help understand and characterize what we’re seeing. Number of buyers up, number of enterprise buyers up significantly. All of the portfolio saw quarter-over-quarter growth. And the reason that’s important because not everybody needs a 9680. Smaller models, smaller data sets, perfect setup for our other products, which line itself up with where we’re seeing the opportunities in enterprise. So institutions of higher education, financial services, health care and life services and manufacturing is where we’re seeing pull for our products. That’s data on-prem, that’s models, that’s doing AI and ML work across the board. That’s what we’re seeing, and we’re pretty excited about that. And the tripling of the pipeline included enterprise customers in enterprise demand.
Tyler Johnson : And I’ll take the share buyback. Look, I think, as you mentioned, look, we tripled share repurchase this quarter versus last quarter. As a reminder, last year, cash was really kind of running more on the weaker side, and we had pulled back and focused more on dilution management. And then as we’ve seen cash accelerate this year, it’s put us in a good position so that we could be a little bit more opportunistic. We don’t typically guide around share repurchase. But I guess the way I would frame it is we’re obviously very focused on the 80% plus capital return. If you go back to when we first started our dividend, which would have been FY ’23, the beginning of FY ’23, we’re running at 96% return of capital. So I feel really good about that. And I do think recognizing we don’t guide, I think it’s fair to say, as we look forward, we’ll definitely be repurchasing more than just dilution management.
Rob Williams: Thanks, Asiya, appreciate it.
Operator: We’ll take our next question from Mike Ng with Goldman Sachs.
Michael Ng : Just have 2 quick ones on AI. First, on the AI margin profile, you obviously had very strong ISG margins in the quarter despite rising contributions from AI server mix. So could you just talk a little bit about how much of a headwind to that ISG margin rate came from the rising mix of AI servers, if that’s the right way to think about it? And then second, I was just wondering if you could talk about the relationship between AI servers and networking and storage for you guys. Should we expect some of that AI sales pipeline that you talked about to eventually include selling Ethernet for AI or Infiniband or more storage in the near term?
