Lenovo's profit beats estimates with PC growth and AI demand
The world's top PC maker said that net income for the June quarter rose 108 per cent to US$505 million, beating the average of analysts' estimates by a wide margin. That's partly due to fair value gains from warrants issued earlier this year. Revenue climbed 22 per cent to US$18.8 billion versus an expected US$17.6 billion.
Beijing-based Lenovo grew quarterly PC shipments 15 per cent, outperforming competitors HP and Dell Technologies, according to Counterpoint Research. The overall market grew 8.4 per cent, its fastest pace since 2022, driven by a replacement cycle as support for Windows 10 ends later this year and customers front-load purchases.
Like its rivals, Lenovo has touted so-called AI PCs equipped with more powerful hardware to perform workloads from real-time transcription to image generation.
The impact of US tariffs could be felt in the coming quarters as new, sweeping measures take effect.
'Due to the US tariff-related uncertainty, PC shipments will likely weaken year on year starting from the second half of 2025,' Counterpoint senior analyst Minsoo Kang said.
US President Donald Trump has announced tariffs on imports from some trading partners and declared plans for a 100 per cent levy on chips, raising concerns for the PC industry.
Lenovo has sought to expand its non-PC business. Its infrastructure solutions group, which sells products from servers to storage, recorded a quarterly revenue of US$4.3 billion. The segment first reversed a loss in the December quarter after customers spent heavily on infrastructure to power AI training and applications.
'Rising sales in the low-margin ISG business could weigh on profitability, though segment margins could be improving as revenue scale quickly expands,' Bloomberg Intelligence analysts Steven Tseng and Sean Chen wrote in a report ahead of the earnings. BLOOMBERG
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