Lenovo Reports Record Third-Quarter Revenue and Strong AI-Driven Growth in Fiscal 2025/26
Lenovo Group Limited announced its financial results for the third quarter of fiscal year 2025/26, delivering record revenue, accelerated profitability, and significant momentum in its artificial intelligence (AI) businesses. The performance reflects the company’s strategic focus on innovation, operational efficiency, and the rapid expansion of AI-driven products and services across its portfolio.
Record Revenue and Accelerated Profitability
During the quarter, Lenovo achieved total revenue of US$22.2 billion, representing an 18% year-on-year increase and marking the highest quarterly revenue in the company’s history. All major business groups recorded double-digit growth compared with the same period last year, demonstrating balanced expansion across devices, infrastructure, and services.
While reported net profit attributable to shareholders declined to US$546 million from US$693 million in the previous year’s quarter—mainly due to restructuring charges and other one-off items—Lenovo’s adjusted net profit told a different story. Excluding non-operating, non-cash, and one-time items, adjusted net profit rose 36% year-on-year to US$589 million. The adjusted net profit margin improved to 2.7%, underscoring the company’s progress in maintaining profitability while scaling its business.
The results highlight Lenovo’s ability to manage through industry cycles, combining innovation-driven growth with disciplined operational execution to navigate component cost increases and supply constraints.
AI Emerges as a Core Growth Engine
A key driver of Lenovo’s performance was the rapid expansion of its AI-related businesses. Revenue linked to AI devices, infrastructure, services, and solutions grew 72% year-on-year, accounting for 32% of total company revenue during the quarter.
The company’s AI strategy spans three primary areas:
- AI devices such as PCs and smartphones equipped with on-device intelligence.
- AI infrastructure including servers and data-center solutions for training and inference.
- AI services and solutions that enable enterprises to deploy and scale AI workloads.
This end-to-end approach positions Lenovo to benefit from both immediate demand for AI training infrastructure and the longer-term shift toward AI inference across industries.
Strategic Restructuring of Infrastructure Business
To capitalize on strong demand for AI infrastructure, Lenovo implemented a strategic restructuring of its Infrastructure Solutions Group (ISG). The move aims to optimize costs, refine product mix, and strengthen sales capabilities.
The restructuring resulted in a one-time charge of US$285 million during the quarter. However, the company expects the changes to generate annual cost savings exceeding US$200 million over the next three years. The initiative is designed to put ISG on a path toward sustainable, profitable growth as AI workloads expand globally.
Leadership Perspective
Chairman and CEO Yang Yuanqing highlighted the company’s strong performance across all core segments and the growing role of AI.
He noted that Lenovo delivered robust double-digit growth across its businesses, with AI emerging as a key engine of expansion. The restructuring of the infrastructure division is intended to create a stronger foundation for long-term profitability. He also emphasized the company’s operational excellence in navigating supply constraints and rising component costs while increasing both market share and profits.
Looking ahead, Lenovo expects AI to become deeply embedded in everyday life and business operations. The company plans to accelerate its hybrid AI strategy, drive further growth, improve margins, and create long-term shareholder value.
Business Group Performance
Intelligent Devices Group (IDG)
Lenovo’s Intelligent Devices Group (IDG) delivered strong results, with revenue increasing 14% year-on-year to US$15.8 billion. The division maintained industry-leading profitability and strengthened its competitive position despite supply-chain challenges.
Key highlights included:
- PC and smart device revenue grew 17% year-on-year, outperforming the broader market for the tenth consecutive quarter.
- Lenovo achieved a record annual PC market share of 24.9%, with quarterly share reaching 25.2%.
- The company remained the only global PC vendor to surpass the 25% market-share threshold.
- Motorola’s smartphone business recorded all-time-high sales and activations.
At the Consumer Electronics Show (CES) 2026, Lenovo unveiled a range of new devices and innovations, including:
- The Lenovo Aura Edition PC series.
- ThinkBook Plus Gen 7 Auto Twist.
- Legion Go handheld gaming device running SteamOS.
- New Motorola foldable smartphones.
The company also introduced Lenovo and Motorola Qira, a system-level personal AI environment designed to enable seamless cross-device collaboration. The platform uses contextual intelligence to help users move between devices without manually launching or switching applications. Qira received the “Best of CES” award for innovation.
Infrastructure Solutions Group (ISG)
The Infrastructure Solutions Group delivered particularly strong growth, with revenue rising 31% year-on-year to US$5.2 billion, a record high for the division.
Key drivers included:
- Continued expansion of the cloud infrastructure customer base.
- Transformation of enterprise infrastructure offerings.
- Rapid growth in AI server deployments.
The AI server business recorded high double-digit revenue growth and accumulated an order backlog of US$15.5 billion. Meanwhile, adoption of Lenovo’s Neptune liquid-cooling solutions surged, with revenue from these systems increasing 300% year-on-year.
During its innovation conference, Lenovo expanded its hybrid AI portfolio with:
- A new AI inference server.
- The Lenovo AI Cloud Gigafactory developed in partnership with NVIDIA.
The collaboration aims to accelerate scalable hybrid AI deployments across enterprise, public cloud, and AI production environments.
Solutions and Services Group (SSG)
Lenovo’s Solutions and Services Group (SSG) continued its steady expansion, delivering US$2.7 billion in revenue, an 18% year-on-year increase and the 19th consecutive quarter of growth.
The division’s operating profit margin improved by 2.1 percentage points to exceed 22%, reflecting a shift toward higher-value service offerings.
Key trends included:
- Strong demand from vertical industries such as manufacturing, retail, transportation, sports, and smart cities.
- Operations and maintenance services, along with project-based solutions, accounting for nearly 60% of SSG revenue.
- Accelerated growth in device-as-a-service (DaaS) and infrastructure-as-a-service (IaaS) offerings driven by AI workloads and GPU adoption.
SSG also launched several new platforms:
- Lenovo Agentic AI, a full-lifecycle enterprise solution for building and managing AI agents.
- Lenovo xIQ, an AI-native delivery platform designed to simplify and scale enterprise AI operations.
These platforms aim to help organizations automate workflows, unify data processes, and improve decision-making through AI.
ESG and Corporate Developments
Lenovo continued to receive recognition for its environmental, social, and governance (ESG) performance during the quarter. Highlights included:
- Appointment of Tareq Alangari as Senior Vice President and President for the Middle East, Turkey, and Africa region.
- Retention of the MSCI ESG AAA rating for the fourth consecutive year.
- Recognition as the “Most Sustainable Organization” by the Hong Kong Institute of Certified Public Accountants.
- Dual “A” leadership ratings in climate change and water security from the CDP.
- Inclusion for the second consecutive year in Fast Company’s list of the 100 Best Places to Work for Innovators.
Outlook
Lenovo’s third-quarter performance underscores the company’s transformation into a diversified technology provider spanning devices, infrastructure, and services. With AI revenue now accounting for nearly one-third of total sales, the company is positioning artificial intelligence at the center of its long-term growth strategy.
By investing in hybrid AI solutions, restructuring its infrastructure business, and expanding high-margin service offerings, Lenovo aims to sustain double-digit growth while improving profitability in the coming years. The company believes the widespread adoption of AI across consumer and enterprise markets will continue to create significant opportunities, reinforcing its focus on innovation and operational excellence.
