Lenovo achieved a stellar third quarter for fiscal year 2025/26, posting record revenues and demonstrating accelerated profitability, fueled by a significant surge in AI-driven business. The tech giant reported a consolidated revenue of $22.2 billion, an 18% increase year-over-year, with all business segments experiencing double-digit growth. Adjusted net income, a key measure of profitability, rose a robust 36% to $589 million, pushing the adjusted net income margin to 2.7%.
This performance underscores Lenovo’s strategic pivot and its capacity to navigate market fluctuations through innovation and operational efficiency. Artificial intelligence has emerged as a primary growth driver, with AI-related revenue skyrocketing by 72% year-over-year to constitute 32% of the total group revenue. This surge is attributed to strong demand across AI-powered devices, infrastructure, and comprehensive solutions. The quarter’s success was further bolstered by market leadership in PCs and Smart Devices, record smartphone activations, and all-time high revenues from the Infrastructure Solutions Group (ISG) and the Services and Solutions Group (SSG).
To better capitalize on the long-term AI opportunity, encompassing both training and inferencing, Lenovo has strategically restructured its ISG business. This restructuring incurred a one-time charge of $285 million in Q3 FY25/26. However, the optimized cost structure, streamlined product offerings, and a fortified sales organization are projected to yield annual savings exceeding $200 million over the next three years, paving the way for accelerated and sustainable profitability within ISG.
“Lenovo delivered an outstanding performance across all fronts in the third fiscal quarter, with all main businesses achieving strong double-digit revenue growth and AI becoming a leading growth engine,” stated Yuanqing Yang, Chairman and CEO. “We implemented a strategic restructuring of our Infrastructure Solutions business, setting it on a solid path toward sustainable and profitable growth. By leveraging our operational excellence, we effectively navigated market challenges of component cost increases and supply shortages, delivered our commitment of gaining market share and improving profitability. Looking ahead, as AI increasingly integrates into individuals’ daily lives and enterprise operations, we will continue to drive Hybrid AI to capture the significant opportunities brought by AI democratization, accelerate growth, improve profitability, and deliver long-term value to our shareholders.”
**Financial Highlights for the Third Quarter of Fiscal Year 2025/26:**
| Metric | Q3 FY 25/26 (US$ millions) | Q3 FY 24/25 (US$ millions) | Change |
| :——————————————————————- | :————————- | :————————- | :—— |
| Group Revenue | 22,204 | 18,796 | 18% |
| Net Income (profit attributable to equity holders) | 546 | 693 | -21% |
| Adjusted Net Income (profit attributable to equity holders – non-HKFRS) | 589 | 435 | 36% |
| Basic earnings per share (US cents) | 4.44 | 5.66 | -22% |
**Intelligent Devices Group (IDG):**
IDG reported exceptional performance, with revenue climbing 14% year-over-year to $15.8 billion, while maintaining industry-leading profitability. Despite supply chain constraints and rising costs, the PC and smart devices segment saw revenue growth of 17% year-over-year. Lenovo’s PC volume has now outpaced the market for ten consecutive quarters, solidifying its position. For the calendar year, Lenovo achieved a historic PC market share of 24.9%, with its quarterly share reaching 25.2%, making it the sole company to ever surpass the 25% global PC market share threshold. Motorola smartphones also experienced a record quarter in terms of volume and activations.
At the recent Tech World event, Lenovo unveiled its latest innovations, including the Lenovo Aura Edition PC lineup, the ThinkBook Plus Gen 7 Auto Twist, and the SteamOS-powered Legion Go gaming device. Further underscoring its commitment to personal AI, Lenovo introduced Lenovo and Motorola Qira, an ambient intelligence system designed to seamlessly integrate across devices. Qira garnered a “Best of CES” award, recognizing its innovative approach to user experience.
**Infrastructure Solutions Group (ISG):**
ISG achieved a record quarter, with revenue surging 31% year-over-year to $5.2 billion. This growth was propelled by robust demand from cloud service providers, enterprise digital transformation initiatives, and a significant acceleration in AI server deployments. The AI server business saw high double-digit year-over-year growth, backed by a strong pipeline valued at $15.5 billion. Liquid-cooling solutions under the Neptune brand experienced a threefold increase in revenue year-over-year.
Lenovo’s Hybrid AI Advantage was further enhanced at Tech World with the launch of new AI inferencing servers and the Lenovo AI Cloud Gigafactory initiative with NVIDIA. This collaboration aims to expedite the adoption of scalable hybrid AI solutions across enterprise, public cloud, and specialized AI factory environments.
**Solutions and Services Group (SSG):**
SSG demonstrated sustained growth, with revenue increasing 18% year-over-year to $2.7 billion, marking 19 consecutive quarters of growth. The operating margin expanded by 2.1 percentage points to over 22%. Growth accelerated in key vertical industries such as manufacturing, retail, and smart cities, as enterprises increasingly move AI from experimental phases to production. The revenue mix continued to skew towards high-growth areas, with Managed Services and Project & Solutions now accounting for nearly 60% of SSG’s total revenue, reflecting a strong services-led strategy for hybrid AI environments.
TruScale DaaS and IaaS experienced accelerated adoption, driven by GPU and AI workloads, as clients prioritize flexibility and scalability. SSG is outperforming market growth in areas like Digital Workplace Services, Hybrid Cloud, AI, and Sustainability. At Tech World, SSG unveiled the next phase of its Lenovo Hybrid AI Advantage with Lenovo Agentic AI and Lenovo xIQ, aimed at simplifying and accelerating AI deployment and management within enterprises.
**About Lenovo:**
Lenovo, a global technology powerhouse with $69 billion in revenue, is a Fortune Global 500 company committed to delivering Smarter Technology for All. Building on its legacy as the world’s largest PC vendor, Lenovo offers a comprehensive portfolio of AI-enabled and AI-ready devices, infrastructure, software, solutions, and services. The company’s continuous investment in innovation aims to foster a more equitable, trustworthy, and intelligent future. Lenovo is listed on the Hong Kong stock exchange (HKSE: 992) (ADR: LNVGY).
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