Lenovo's Hybrid AI Strategy Drives Double-Digit Growth and Expansion Plans

Lenovo: Hybrid AI Strategy Is 'Paying Off' Amid Double-Digit Growth

Lenovo CEO and Chairman Yuanqing Yang says the company's profitable, double-digit growth could be credited in part to its hybrid AI strategy as well as the $548 million it spent on research and development expenses last quarter. Lenovo said its hybrid AI strategy, buttressed by hundreds of millions of U.S. dollars invested in research and development, is "paying off" as the tech giant announced double-digit growth across its client device, data center and solutions businesses. The Chinese vendor reported earnings for the second quarter of its 2025 fiscal year on Friday, saying that revenue grew 24 percent year over year to $17.9 billion while net income increased 48 percent year over year to $404 million. Its second quarter ended Sept. 30. [Related: Lenovo Tech World: 5 Biggest Product, Software Launches] Lenovo also highlighted that revenue from non-PC sources, including its data center business, was up 5 points year over year to 46 percent. Yuanqing Yang (pictured), Lenovo's chairman and CEO, said the company's profitable growth could be credited in part to its hybrid AI strategy, which covers everything from PCs and smartphones to servers and services, as well as the $548 million it spent on research and development expenses last quarter. "This significant momentum is driven by our clear strategy, innovation investment, operational excellence and global presence, as well as our commitment to hybrid AI, where we are further strengthening our market differentiation and industry leadership," he said in a statement. "As we look ahead, we are confident that our ongoing innovation advancements in hybrid AI will continue to accelerate growth and profitability, propelling us forward for the rest of the fiscal year," Yang added. In Lenovo's Intelligent Devices Group, second-quarter revenue grew 17 percent year over year to $13.5 billion. PC revenue was up 12 percent, smartphone revenue was up 43 percent and tablet revenue was up 19 percent compared with the same period last year. The company said growth in the PC business allowed it to expand its market-share leadership for client computers to nearly 24 percent. It expects the market to "steadily recover and enter a new refresh cycle driven by AI PCs, gradually growing to represent around 80 percent of the PC industry landscape by 2027." In the Infrastructure Solutions Group, second-quarter revenue grew 65 percent year over year to $3.3 billion. The company noted that combined revenue from storage, software and services increased 35 percent to a "record high" while sales of its Neptune liquid-cooled servers rose 48 percent compared with the same period last year. However, the company said losses in the business unit stood at $73 million in the first half of the fiscal year due to "high investment requirements for AI servers and lower profitability profile in the fast-growing cloud business." Lenovo noted that the data center business will "continue to strengthen" its business model for selling to enterprises and small to midsize businesses. These actions include "simplifying portfolios and improving operations as well as diversifying cloud service provider customers." The vendor also said that the Infrastructure Solutions Group will "continue to build differentiation with its industry-leading liquid cooling technology to meet the increasing performance and energy efficiency demands of AI workloads." "In addition, [the business unit] will continue to grow key strategic partnerships to develop hybrid AI infrastructure solutions," it added. In Lenovo's Solutions and Services Group, second-quarter revenue grew 13 percent year over year to $2.2 billion, making this the unit's 14th consecutive quarter of double-digit growth. The company said revenue from managed services and project and solutions services increased 3 points year over year to account for nearly 60 percent of the division's total revenue for the quarter. The vendor said it experienced strong momentum from flagship offerings such as digital workplace solutions, hybrid cloud and sustainability solutions -- three areas where it will "continue to embed AI" as part of its hybrid AI strategy. "The global IT services market is expected to see steady double-digit growth over the next three years, with AI services growing more than twice as fast as the market to become the primary driver of the IT services market," Lenovo said.

Lenovo Builds on AI Momentum With Earnings Beat -- Update

Lenovo Group's earnings grew faster than expected, as the world's largest personal-computer maker began to reap benefits from its bets on artificial intelligence, which could drive the next wave of demand for PCs and beyond. Net profit for the three months ended September rose 44% from a year earlier to $359 million, the PC maker said Friday, marginally beating the estimate of $355 million, according to a FactSet poll of analysts. Revenue reached $17.85 billion, up 24%, driven by higher contributions from investments in artificial intelligence as well as growth in personal computers and smartphones. Lenovo has unveiled several AI-enabled PC models in recent months and has bet on the emerging tech to lead the global market to a long-term recovery and help its intelligent-devices segment, which includes PCs, smartphones and tablets, deliver better-than-industry growth and sustainable profitability. The segment reported a 17% revenue gain in the quarter ended September. After the company's first phase of AI PCs launched in China in May, Lenovo's AI PC shipments have reached "double digit share" of total laptop shipments in the China market, it said in a statement. Lenovo has also been diversifying its revenue streams beyond its PC business, with non-PC revenue increasing to 46% of overall sales. Its infrastructure-solutions segment's revenue surged 65% on strong cloud momentum and a recovering enterprise business, but remained in an operating loss. Analysts reckon that it could take longer than expected for the segment to return to profitability as Lenovo accepted low-margin projects to win orders from cloud-service providers, prioritizing orders to catch up in the AI server business. "We are confident that our ongoing innovation advancements in hybrid AI will continue to accelerate growth and profitability," Lenovo Chairman and Chief Executive Yuanqing Yang said.

Lenovo Raises PC Shipments Outlook for 2025 After Strong Earnings

Lenovo's data center segment could grow substantially on AI server order Lenovo Group Ltd. hiked its projection for global PC shipments in 2025 after posting better-than-expected earnings, saying AI features will help boost growth next year. The overall PC market will expand in the current quarter, Lenovo's Chief Executive Officer Yang Yuanqing told Bloomberg News after earnings on Friday. He raised his outlook for global shipments in 2025 to double-digit percentage growth, up from a previous forecast of five percent to 10 percent, citing demand for AI PCs and the replacement cycle facilitated by Windows 11. Yang added that Lenovo is not particularly disadvantaged against its key competitors if US President-elect Donald Trump decides to slap tariffs on foreign goods after formally returning to the White House. Net income grew 44 percent to $358.5 million (roughly Rs. 3,027 crore) in the September quarter, Beijing-based Lenovo said in a filing on Friday. That compares with an average estimate of $343.3 million (roughly Rs. 2,899 crore). Revenue rose 24 percent to $17.85 billion (roughly Rs. 1,50,738 crore), also exceeding analyst projections. The company's quarterly PC shipments climbed three percent from a year ago, according to industry researcher IDC, while rivals like Dell Technologies Inc. and Apple Inc. saw declines. "The market is taking a breather before going into the year-end buying period," said Bryan Ma, vice president at IDC. PC makers are making a big push this year to add artificial intelligence capabilities -- with a helping hand from Windows maker Microsoft Corp. -- in a bid to entice consumers into an upgrade cycle. As the industry bounces back from the troughs of recent years, the reception to this new crop of AI PCs will be crucial to future success. The mass market's interest for such devices, which have higher price tags, still remains to be tested. Lenovo's AI bet is not limited to end-user devices. The company's infrastructure solutions group, which sells servers to large-scale customers, is another key pillar of its investment into the nascent technology. Lenovo sees that division powering growth by delivering data center hardware that helps accelerate AI model training and computations. "Lenovo's data center segment could grow substantially on AI server order wins and improving supply of Nvidia's GPUs, though profitability may remain subdued", Bloomberg Intelligence analysts Steven Tseng and Sean Chen wrote in a report ahead of the earnings release. © 2024 Bloomberg L.P.

Lenovo Group Second-Quarter Net Rose, Supported by AI Investments

Lenovo Group sustained its growth momentum, supported by strong intelligent-device sales as it bets on AI-empowered PCs to fuel the next wave of demand for personal computers. Net profit for the three months ended September rose 44% from a year earlier to $359 million, the world's largest PC maker said Friday, marginally beating the estimate of $355 million, according to a FactSet poll of analysts. Revenue reached $17.85 billion, up 24%, driven by higher contributions from investments in AI as well as growth in personal computers and smartphones. Lenovo has unveiled several AI-enabled PC models in recent months and has bet on the emerging tech to lead the global market to a long-term recovery and help its intelligent-devices segment, which includes PCs, smartphones and tablets, deliver better-than-industry growth and sustainable profitability.

Lenovo plans global factory expansion as Q2 results beat; eyes AI growth

While China remains its main manufacturing base, Lenovo operates more than 30 factories in nine different markets. The company plans to open facilities in Saudi Arabia following a major investment deal with the kingdom's Public Investment Fund, Chairman Yang said.Lenovo will further diversify its supply chain and plans to open more manufacturing facilities outside China amid global geopolitical uncertainty, Chairman Yang Yuanqing said. Lenovo, the world's largest PC maker, has most of its plants in China, a common situation in the electronics industry that creates potential vulnerability as US President-elect Donald Trump threatens to impose 60% tariffs on Chinese imports. Yang told Reuters that while it's too early to predict the new US administration's policies, Lenovo has an advantage over competitors in hedging such risks through its more diversified manufacturing base and sourcing strategy, as well as balanced regional revenue streams. While China remains its main manufacturing base, Lenovo operates more than 30 factories in nine different markets. The company plans to open facilities in Saudi Arabia following a major investment deal with the kingdom's Public Investment Fund, Yang said. On Friday, Lenovo reported a 24% rise in its fiscal second-quarter revenue from a year earlier. That was partly spurred by sales growth of computers that can handle artificial intelligence workloads as the global personal computer industry showed signs of recovery. The Chinese technology company reported revenue of $17.9 billion for the quarter ended September 30, exceeding analysts' expectations of $16.0 billion, according to LSEG data. Net profit reached $359 million, compared with analysts' estimates of $331.7 million. Lenovo's global PC shipments rose 3% to 16.5 million units in the September quarter, maintaining its commanding 24% market share. Across the industry, global PC shipments fell 2.4% from a year earlier, according to research firm IDC. Demand for AI-capable computers has emerged as a key growth driver for the PC industry, with manufacturers racing to launch models equipped with specialised chips for artificial intelligence applications. Lenovo launched its first AI-powered PCs in China in May before rolling them out globally in September. Yang expects AI PCs to account for 25% of Lenovo's shipments by 2025, rising to as much as 80% by 2027. Lenovo has positioned itself to benefit from the AI trend by expanding its AI server and software businesses. The company's Infrastructure Solutions Group, made up of IT solutions including servers, saw revenue in the September quarter grow by more than 60% from a year earlier, driven partly by strong demand for servers handling AI workloads in data centres. Its Solutions and Services Group, which includes cloud-based software offerings for enterprise clients, posted revenue of $2.2 billion, up from $1.9 billion a year earlier.