Lenovo Builds on AI Momentum With Earnings Beat -- Update

Dow Jones11-15

By Sherry Qin

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.

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

(END) Dow Jones Newswires

November 14, 2024 21:12 ET (02:12 GMT)

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Lenovo Builds on AI Momentum With Earnings Beat -- Update

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