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Lenovo, the top global manufacturer of personal computers, reported impressive first-quarter earnings driven by soaring demand for AI-enabled devices. The company’s revenue increased 22% year-over-year to $18.8 billion for the three months ending in June, marking its highest ever Q1 revenue.
Net profit more than doubled, reaching $505 million. However, the company emphasized a different profit metric as more indicative of its core operations. Adjusted net profit, excluding non-cash fair value gains on warrants, rose 22% to $389 million.
Some of these gains stemmed from fair value adjustments related to a $2 billion issuance of three-year convertible bonds in January to Alat, a subsidiary of Saudi Arabia’s Public Investment Fund, one of the world’s largest sovereign wealth funds.
The company swiftly integrated AI into its product lineup. During the quarter, AI-enhanced PCs made up one-third of all PC sales, surpassing the previous projection of 25%. Over 40% of weekly active users engaged with AI features, according to the CEO.
This shift toward AI tools significantly boosted sales across different divisions. Revenue from the Intelligent Devices Group, which includes PCs, tablets, and smartphones, grew 18% to $13.5 billion—the fastest increase in 15 quarters. Operating profit in this segment also increased 15% to $950.4 million.
Revenue from the Infrastructure Solutions Group, which handles data centers and AI servers, surged 36% to $4.3 billion. However, the company’s heavy investments in AI resulted in operating losses more than doubling to $85.5 million.
The Solutions and Services Group, which provides IT solutions and operational support, saw a 20% revenue increase to $2.3 billion, with operating profit rising 26% to $500.8 million.
The CEO noted that US tariff policies have had minimal impact on the company, citing its global manufacturing footprint, which includes over 30 facilities across more than 10 countries to mitigate trade risks.
The Americas remained the company’s largest market, with revenues up 14% to $6.3 billion. However, Asian markets grew at a faster pace. Domestic sales in China increased 36% to $4.7 billion, while revenues from Europe, the Middle East, and Africa grew 9% to $4.2 billion. Excluding China, the Asia-Pacific region experienced a 39% jump to $3.7 billion.
Following a five-month high, shares listed in Hong Kong closed down 6% at HKD10.83 (roughly $1.40) today.
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