Strong growth in PC shipments and high demand for AI have led Lenovo's second-quarter performance to far exceed market expectations, with net profit doubling year-on-year.
On Thursday, August 14, Lenovo Group announced its financial report for the first fiscal quarter of 2025, ending June 30. The main financial data is as follows:
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Revenue: The group's revenue for this quarter increased by 22% to USD 18.8 billion, exceeding the expected USD 17.4 billion, setting a record for the highest first-quarter revenue.
Profit: The group's net profit for this quarter increased by 108% year-on-year to USD 505 million, significantly surpassing analyst expectations; gross profit was USD 2.774 billion, an increase of 8% year-on-year.
Main Business: Revenue from the smart devices business increased by 18% year-on-year, recording the fastest year-on-year growth in the past 15 quarters; revenue from the infrastructure business increased by 36% year-on-year, with AI server business revenue more than doubling year-on-year; revenue from solution services increased by 20% year-on-year.
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After the financial report was released, Lenovo Group's Hong Kong stock fell nearly 4%.
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<h2>Strong Recovery in PC Business Drives Performance</h2>
The financial report shows that Lenovo's quarterly PC shipments increased by 15%, outperforming competitors such as HP and Dell, becoming the main driver of better-than-expected performance.
According to data from Counterpoint Research, the overall PC market grew by 8.4%, the fastest growth rate since 2022. This growth was mainly driven by replacement demand, as support for Microsoft's Windows 10 operating system will end later this year.
Corporate clients have accelerated purchases to avoid potential U.S. tariff impacts, further boosting PC demand.
However, analysts warn that the impact of U.S. tariff policies may become apparent in the coming quarters. Counterpoint senior analyst Minsoo Kang stated:
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“Due to the uncertainty related to U.S. tariffs, PC shipments may begin to decline year-on-year starting in the second half of 2025.”
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Lenovo CEO Yang Yuanqing stated that the current impact of tariffs on the business is limited, and confidence in the outlook for fiscal year 2026 has improved compared to the previous quarter. Despite geopolitical uncertainties, AI PC shipments are still on track.
<h2>Infrastructure Business Achieves Profitability for the First Time</h2>
Lenovo has made significant progress in expanding its non-PC business.
The report shows that Lenovo's infrastructure business revenue reached USD 4.3 billion this quarter, with the department turning profitable for the first time in the December quarter of last year.
This shift is mainly due to significant investments by clients in AI training and application infrastructure. With the rapid development of AI applications, demand for infrastructure products such as servers and storage has surged, bringing new growth momentum to Lenovo
However, Bloomberg Intelligence analysts Steven Tseng and Sean Chen pointed out in a report prior to the earnings release that the sales growth of the low-margin ISG business may put pressure on overall profitability, although the profit margin of this sector may improve as revenue scales expand rapidly

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Lenovo's revenue for this fiscal quarter grew by 22% to USD 18.8 billion, and net profit increased by 108% year-on-year to USD 505 million, with all three major businesses achieving strong growth. The Group's CEO stated that the current impact of tariffs on the business is limited, and confidence in the outlook for fiscal year 2026 has strengthened compared to the previous quarter

- Lenovo's Q2 performance exceeded market expectations, with a 22% revenue increase to $18.8 billion and a net profit doubling to $505 million.  
- The strong growth in PC shipments, up 15%, was driven by replacement demand as Windows 10 support ends, despite potential future impacts from U.S. tariffs.  
- Lenovo's infrastructure business achieved profitability for the first time, fueled by significant investments in AI training and application infrastructure, although analysts caution about the low-profit margins affecting overall profitability.

Strong demand for PCs and AI, Lenovo's profit grows by 108%, significantly exceeding expectations