Lenovo’s profit jumps to $693M in Q3 as global PC demand picks up

Chinese technology giant Lenovo (0992.HK) reported a 20% year-on-year increase in third-quarter revenue, highlighting a rebound in global PC demand following a prolonged industry slump.

The world’s largest PC manufacturer posted $18.8 billion in revenue for the quarter ending December 31, 2024, surpassing analysts’ forecasts of $17.82 billion, according to LSEG data.

Lenovo’s net profit surged to $693 million, nearly twice the analysts’ estimate of $367.7 million, driven by growing AI-driven computing solutions and stronger sales in its core PC segment.

The company also maintained its dominance in the global market, securing a 24.5% share as PC shipments grew 4.8%, according to IDC.

While the PC industry has struggled with declining demand since the post-pandemic correction, research group IDC reported a 1.8% increase in global shipments during the last quarter of 2024.

Lenovo has capitalised on this gradual recovery by strengthening its AI-powered product portfolio and expanding its IT solutions business, which has contributed to its strong financial performance.

AI-powered PCs fuel Lenovo’s growth

Artificial intelligence has emerged as a major catalyst for PC market growth, and Lenovo has positioned itself at the forefront of this transformation.

The company launched its first AI-powered PCs in China in May 2024, followed by an international rollout in September.

CEO Yang Yuanqing has set ambitious targets, projecting that AI PCs will make up 25% of Lenovo’s shipments by 2025 and could reach 80% by 2027.

The rising demand for AI-capable computers, featuring advanced processors optimised for machine learning applications, has significantly boosted Lenovo’s PC sales.

As more enterprises and consumers seek AI-enhanced functionality, the company expects continued growth in this segment.

Further strengthening its AI ecosystem, Lenovo integrated Chinese AI startup DeepSeek’s technology into its devices, enabling users to access AI services through Lenovo’s virtual assistant “XiaoTen” without additional downloads or registration.

IT and cloud solutions expand

Beyond its core PC business, Lenovo’s infrastructure solutions group (ISG) posted an impressive 59% year-on-year revenue growth in Q3, propelled by strong demand for servers and data centre solutions.

The company’s expansion into cloud-based IT infrastructure has become a critical revenue driver, helping it diversify its business model and reduce reliance on hardware sales.

Lenovo’s solutions and services group (SSG), which provides enterprise cloud software and IT consulting services, reported $2.3 billion in revenue, marking a 12% increase from the previous year.

This segment’s consistent growth underscores Lenovo’s shifting focus towards high-margin services, a trend that aligns with broader industry dynamics as businesses increasingly adopt cloud-based technologies.

Lenovo’s market leadership strengthens amid industry challenges

Despite macroeconomic headwinds, Lenovo has leveraged its strong market position, AI innovation, and IT solutions expansion to deliver higher-than-expected earnings.

As the PC industry continues its recovery, Lenovo remains well-positioned to capitalize on rising demand for AI-driven computing while expanding its presence in enterprise cloud services and IT infrastructure.

With its market share at 24.5% and a growing footprint in the AI and cloud sectors, Lenovo is poised for sustained growth, even as global PC shipments recover at a slower pace.

As industry trends shift towards AI-integrated computing and cloud-driven enterprise solutions, the company’s strategic investments appear to be paying off, reinforcing its position as the world’s leading PC vendor.