Lenovo Group (0992.HK) of China reported a 9% increase in fourth-quarter revenue to $13.8 billion on Thursday. As the leading global producer of personal computers (PCs), Lenovo emerged from a demand slump following the COVID-19 pandemic.
The fourth-quarter revenue surpassed analysts’ estimates, marking a second consecutive quarter of growth after enduring five quarters of declines due to the post-COVID slowdown.
According to IDC data, the global PC market returned to growth in the first quarter of this year after almost two years of decline. Lenovo maintained its position as the top PC manufacturer with a 23% market share, as PC shipments increased by 1.5% year over year to 59.8 million units.
However, Lenovo’s revenue for the fiscal year ended March 31 decreased by 8% to $56.9 billion, slightly exceeding analysts’ expectations.
In the January-March quarter, Lenovo’s net profit surged by 118% to $248 million, surpassing analysts’ projections.
The company is actively exploring opportunities in artificial intelligence (AI) while diversifying its business beyond PCs into smartphones, servers, and IT services. Revenue for its service business unit increased by 8.5% to $1.8 billion for the quarter.
Lenovo’s shares surged by 12% on Wednesday following the unveiling of two new AI PCs designed to run AI applications efficiently.
Analysts at Morgan Stanley anticipate that Lenovo will benefit significantly from the growth of AI PCs, with projections indicating that AI PCs could account for 64% of new PCs by 2028. They predict that by 2028, AI PCs could generate up to 53% of Lenovo’s revenue, a substantial increase from the current 2%.
Lenovo’s shares experienced a slight decline of 0.18% on Thursday, ahead of the quarterly earnings release.
