Lenovo's Q4 Revenue Surges 9% to US$13.8B, Beating Expectations Amid AI PC Expansion
Lenovo reports a 9% increase in fourth-quarter revenue, reaching $13.8 billion. Revenue growth streak continues for the second consecutive quarter. Lenovo maintains its position as the market leader in the PC industry.
This marks a significant milestone for the company as it emerges from a demand slump caused by the COVID-19 pandemic. The impressive revenue figure surpassed analysts' expectations, which averaged at US$13 billion.
Lenovo's revenue growth streak continues for the second consecutive quarter, following five quarters of decline due to the post-COVID slowdown. The positive performance aligns with the recent findings from research firm IDC, which stated that the global PC market has returned to growth in the first quarter of this year after nearly two years of decline.
During the first quarter, PC shipments grew by 1.5% year over year, totaling 59.8 million units. Lenovo maintained its position as the market leader with a 23% market share. This achievement solidifies the company's dominance in the PC industry.
Despite the overall positive results, Lenovo's revenue for the fiscal year ending on March 31 decreased by 8% to $56.9 billion, slightly exceeding analysts' expectations of $56.19 billion. However, the company's net profit for the January-March quarter soared by 118% to $248 million, surpassing analysts' estimates of $162 million.
Lenovo's shares experienced a slight decline of 1% in afternoon trading on Thursday. Nevertheless, the company remains optimistic about its future prospects. Lenovo is actively exploring opportunities in artificial intelligence (AI) and expanding its non-PC business segments, including smartphones, servers, and information technology services.
The company's service business unit also witnessed growth, with an 8.5% increase in revenue to $1.8 billion for the quarter. Lenovo's recent unveiling of two new AI PCs has garnered significant attention, leading to a 9-year peak in its shares, which closed about 12% higher on Wednesday.
According to Morgan Stanley analysts, Lenovo is poised to benefit greatly from the AI PC boom in Asia. They predict that by 2028, AI PCs will account for 64% of new PCs, generating up to 53% of revenue for Lenovo, compared to the current 2%.
Lenovo CEO Yuanqing Yang expressed his belief that AI PCs will drive the PC replacement cycle. The company has already begun shipping AI PCs this month, and Yang anticipates that by the end of the year, 10% of their shipped PCs will be AI PCs. Looking ahead, he envisions that by 2026, this number could increase to 50% to 60%.
While Lenovo collaborates with Microsoft on AI PCs outside of China, the government's restrictions on foreign AI services limit the availability of Microsoft's AI features within the country. However, Yang sees this as an opportunity for Chinese companies, including Lenovo, to emerge as AI service providers in China. He stated that although they cannot use Microsoft's "Copilot" in China, they can offer Chinese customers a similar or even better experience in certain areas.
Lenovo reports a 9% increase in fourth-quarter revenue, reaching US$13.8 billion.
Revenue growth streak continues for the second consecutive quarter.
Lenovo maintains its position as the market leader in the PC industry.
Source: REUTERS