Lenovo Profit Grows Another Quarter, Helped by AI — Update

By Sherry Qin

Lenovo's profits rose for a second-straight quarter as the world's largest PC maker emerges from a yearslong downturn in the industry and captures opportunities in artificial intelligence to drive growth.

Net profit for the three months ended June rose 38% from a year earlier to $243 million, Lenovo said Thursday, beating analysts expectations.

Revenue climbed 20% to $15.45 billion, driven by an acceleration in growth across its computing, infrastructure, and services segments.

Lenovo in May unveiled its AI PCs, equipped with Microsoft's Copilot tool and Qualcomm's Snapdragon X Elite processor. The company, which called the rise of the AI PC "an inflection point" for the industry, expects its adoption to lead the global PC market to a long-term recovery, with sales surpassing prepandemic levels.

The adoption of AI is helping its intelligent devices segment, which includes PCs, smartphones and tablets, "deliver premium-to-market growth, strong average selling prices and sustainable profitability," Lenovo said.

Lenovo has been also diversifying its revenue streams beyond its PC business, with non-PC revenue increasing 5% to a historically high 47% of last quarter's overall sales.

Its infrastructure solution business, which comprises its server, storage, and networking businesses in data centers, saw sales surge 65% thanks to the launch of AI infrastructure products and an improved supply of AI graphics processing units.

Lenovo raised $2.0 billion from a unit of Saudi Arabia's sovereign wealth fund and inked a deal to build a manufacturing hub serving the region in May. It said the two deals would help it speed up an "ongoing global strategic transformation" as it aspires to grow services revenue alongside its bread-and-butter PC business.

"The combination of our solid performance and continued progress in hybrid AI will keep enabling us to achieve sustainable growth and profitability increases," Lenovo chief executive Yang Yuanqing said.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

August 15, 2024 01:43 ET (05:43 GMT)

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