Lenovo Reports Robust Growth in Q3 FY2024/25 with Strategic AI Investments
Lenovo Group Limited, a prominent name in the global technology landscape, has recently unveiled its financial results for the third quarter of the fiscal year 2024/25. The company recorded a remarkable 20% increase in revenue compared to the previous year, amounting to $18.8 billion. This marks the third consecutive quarter of double-digit growth, showcasing Lenovo’s strong market presence and strategic direction. Net income also experienced substantial growth, more than doubling to $693 million. This figure includes a one-time income tax credit of $282 million, as reported under the Hong Kong Financial Reporting Standards (HKFRS).
A significant aspect of Lenovo’s success is its diversified growth strategy, particularly the increase in non-PC revenue, which rose by over four percentage points to 46% year-on-year. This achievement can be attributed to the company’s focused efforts on a hybrid-AI strategy, the revitalization of its Infrastructure Solutions Group (ISG), and notable growth in both the Intelligent Devices Group (IDG) and Solutions and Services Group (SSG).
Investment in Research and Development
Lenovo’s commitment to innovation is evident in its increased investment in research and development (R&D). The company boosted its R&D spending by nearly 14% year-on-year to $621 million, reflecting its dedication to pioneering technological advancements. At the recent CES 2025 global technology event, Lenovo introduced groundbreaking products, including the world’s first rollable AI laptop and a handheld gaming device offering the flexibility of using either Windows OS or Steam OS. These innovations, along with Moto AI, earned Lenovo 185 industry awards, underscoring its leadership in technology.
AI and Innovation Strategy
Lenovo’s innovation strategy is heavily focused on artificial intelligence (AI), which is seen as a transformative force across various sectors. The company is building a robust AI technology platform and driving advancements in agentic AI. This involves creating devices and solutions that leverage AI to enhance user experiences. Lenovo is a leader in personal AI innovations, particularly in AI-enabled devices. Simultaneously, it is harnessing hybrid infrastructure and its Hybrid AI Advantage to establish a strong foothold in enterprise AI solutions.
The ongoing AI boom presents significant opportunities for Lenovo across devices, infrastructure, and services. The increased efficiency in AI processing and reduced computing costs are democratizing AI applications, making them more accessible to businesses and consumers alike. Lenovo’s hybrid AI strategy is poised to accelerate the development and deployment of AI technologies, enhancing their return on investment (ROI) and customization capabilities.
Future Outlook and Strategic Partnerships
Looking forward, Lenovo is committed to sustaining its growth momentum through continued investments in hybrid AI innovation. The company is confident that its global, flexible, and resilient supply chain, along with its manufacturing expansion in the Middle East and strategic partnerships with organizations like Formula 1 and FIFA, will enable it to navigate macroeconomic uncertainties successfully. Lenovo’s strong performance in the third quarter provides a solid foundation for continued growth and profitability.
Financial Highlights and Business Segment Performance
Lenovo’s Chairman and CEO, Yuanqing Yang, expressed satisfaction with the company’s performance, highlighting the significant growth in revenue and profit across all core business segments. The ISG business returned to profitability, and the smartphone business experienced rapid growth. AI technology is playing a pivotal role in this success, enhancing the efficiency and reducing the costs of personal AI, on-device AI, and edge AI solutions. These advancements are accelerating the adoption of AI in enterprises, aligning with Lenovo’s hybrid AI strategy.
Intelligent Devices Group (IDG): Leading in AI Devices
In the third quarter of FY2024/25, the IDG reported strong performance with a 12% year-on-year revenue growth, amounting to $13.8 billion. The PC business solidified its market leadership with a 24.3% market share, maintaining a significant lead over competitors. Smartphones also demonstrated strong growth, particularly in the Asia Pacific and EMEA regions. Looking ahead, IDG aims to continue innovating in device form factors and enhancing AI capabilities to provide seamless user experiences across multiple devices and ecosystems.
Infrastructure Solutions Group (ISG): Achieving Break-even and Growth
The ISG achieved a nearly 60% year-on-year revenue increase, reaching $3.9 billion and breaking even in the process. This success is driven by the rapid growth of the Cloud Services Provider (CSP) business and steady progress in the enterprise and SMB sectors. The AI server business and Lenovo’s Neptune liquid cooling solutions contributed significantly to this growth. ISG anticipates continued demand for hybrid infrastructure solutions, including public clouds, on-premises data centers, private clouds, and edge computing.
Solutions and Services Group (SSG): Record Revenue and High Profitability
SSG extended its streak of double-digit year-on-year revenue growth to 15 consecutive quarters, achieving $2.3 billion in revenue and a 20% operating margin. AI-powered solutions are driving momentum for hardware-attached services, enhancing user experiences. The non-hardware solutions and services segment remains a strong profit engine, with its revenue mix increasing by five points year-on-year to nearly 60% of SSG’s total revenue. SSG is focused on building capabilities under the Lenovo Hybrid AI Advantage framework to drive market growth.
Environmental, Social, and Governance (ESG) and Corporate Achievements
In the past quarter, Lenovo achieved several noteworthy milestones, including being named the official technology partner for FIFA, a top-tier sponsorship that includes the FIFA World Cup 2026 and the FIFA Women’s World Cup 2027. The company was also recognized with prestigious ESG and Corporate Governance awards, highlighting its commitment to sustainability and corporate excellence. Lenovo received the Gold Award for Most Sustainable Companies and was rated in the top 1% by EcoVadis, earning a Platinum medal for its sustainability efforts.
Conclusion
Lenovo’s latest financial results underscore its strategic focus on AI-driven innovation and diversified growth. By investing in cutting-edge technologies and forging strategic partnerships, Lenovo is well-positioned to navigate the dynamic tech landscape and deliver sustained growth and profitability. The company’s dedication to AI and innovation is paving the way for a smarter, more connected future for its customers worldwide.
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