NEW YORK (CNN/Money) - It's official. The personal computer market is finally making a comeback.

Intel CEO Craig Barrett told Dow Jones Newswires in Taipei Thursday that although the world's largest semiconductor manufacturer was not seeing a full-fledged recovery, there has been a small pickup in corporate demand for new PCs as of late.

That sounds like great news -- except that the market has been anticipating it pretty much all year. The fact that corporations would eventually need to buy new PCs is not a huge shock.

Techies have been talking for nearly a year about the inevitability of the PC replacement cycle, because the last big wave of buying was in 1999 when businesses rushed to get new equipment that was Y2K compatible.

With that in mind, it looks as though a recovery is priced into PC-related chip stocks already.

Intel (INTC: Research, Estimates), which generates most of its sales from microprocessors for PCs, is the best performing stock in the Dow this year, up 67 percent. Shares of Intel rival Advanced Micro Devices (AMD: Research, Estimates) are up 44 percent. Memory chip developer Micron Technology (MU: Research, Estimates) is up about 40 percent.

Intel now trades at 38 times 2003 earnings estimates. AMD and Micron are expected to post losses this year.

Of course, chip stocks should benefit from increased sales of PCs. Earnings projections for Intel have climbed over the past few months, rising to 69 cents a share from 61 cents a share three months ago.

However, it still remains to be seen whether or not demand will bounce back in a material way or if this is just normal seasonal improvement. Back to school and holiday shopping, after all, usually lift PC sales in the second half of the year.

If this is a temporary spike in demand and not something sustainable, then it will be tougher to find reasons to raise Intel's earnings estimates for this year and next, making it tougher to justify Intel's valuation.

One troubling sign is that leading PC makers seem to be resorting to price wars in order to stimulate sales.

Dell announced Wednesday it was lowering prices on PCs and other products by as much as 22 percent. Dell, because of its efficient business model, is able to slash prices without sacrificing profit margins too much. But that's not the case for the rest of the industry.

Hewlett-Packard said in its disappointing third-quarter earnings announcement this week that it cut PC prices too aggressively in order to try and win market share and, as a result, its PC business lost money in the quarter.

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Now it's easy to dismiss HP's problems as being company specific, and therefore not much of a problem for the rest of tech. But the simple fact of the matter is that if the second largest maker of PCs is not financially healthy, that's not good news for chip companies.

The rally in chip stocks is predicated on a broad recovery in the PC market, not just strength from Dell, which has been rolling along with barely a hiccup for the past year.

Investors are going to need to see more than the slow recovery that Barrett mentioned in order for chip stocks to keep heading higher.

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