Lenovo beats profit forecast as AI demand drives gradual PC recovery

Lenovo has a manufacturing facility in Dublin.

Lenovo, which has significant operations in Ireland, reported a better-than-expected quarterly profit, affirming hopes for a gradual computing industry recovery driven by global AI spending.

Net income grew 38% to $243m (€220m) in the three months to the end of June, Lenovo said in a filing on Thursday.

That compares with an average estimate for $231m. Revenue rose 20% to $15bn.

The results reflect how growing demand for the servers essential in artificial intelligence development is lifting the computing hardware market from its post-covid slump.

From Amazon to Google and Baidu, big tech companies are raising spending on data centres at a rapid clip, preparing for an envisioned boom in AI services.

Lenovo extended its lead over HP and Dell Technologies with 14.7 million PCs shipped during the June quarter, according to research firm IDC.

But the Chinese firm’s stock has lagged its rivals this year, in part because of worries about the world’s second largest economy and exposure to geopolitical tensions.

Chief executive Yang Yuanqing is betting on AI-powered devices to boost Lenovo’s global business in coming years, though that market remains untested.

The global PC market’s growth will accelerate to somewhere between 5% and 10% next year, “with the new refresh cycle driven by both AI-PC as well as Windows 11 replacement", he said.

Last month Apple reported a 21% gain in personal computer shipments in the second quarter, the biggest jump among global PC makers as part of a budding industry recovery that produced a second consecutive period of growth.

Bloomberg