Lenovo: Hybrid AI Strategy Is ‘Paying Off’ Amid Double-Digit Growth

Lenovo CEO and Chairman Yuanqing Yang says the company’s profitable, double-digit growth could be credited in part to its hybrid AI strategy as well as the $548 million it spent on research and development expenses last quarter.

Lenovo said its hybrid AI strategy, buttressed by hundreds of millions of U.S. dollars invested in research and development, is “paying off” as the tech giant announced double-digit growth across its client device, data center and solutions businesses.

The Chinese vendor reported earnings for the second quarter of its 2025 fiscal year on Friday, saying that revenue grew 24 percent year over year to $17.9 billion while net income increased 48 percent year over year to $404 million. Its second quarter ended Sept. 30.

Lenovo also highlighted that revenue from non-PC sources, including its data center business, was up 5 points year over year to 46 percent.

Yuanqing Yang (pictured), Lenovo’s chairman and CEO, said the company’s profitable growth could be credited in part to its hybrid AI strategy, which covers everything from PCs and smartphones to servers and services, as well as the $548 million it spent on research and development expenses last quarter.

“This significant momentum is driven by our clear strategy, innovation investment, operational excellence and global presence, as well as our commitment to hybrid AI, where we are further strengthening our market differentiation and industry leadership,” he said in a statement.

“As we look ahead, we are confident that our ongoing innovation advancements in hybrid AI will continue to accelerate growth and profitability, propelling us forward for the rest of the fiscal year,” Yang added.

In Lenovo’s Intelligent Devices Group, second-quarter revenue grew 17 percent year over year to $13.5 billion. PC revenue was up 12 percent, smartphone revenue was up 43 percent and tablet revenue was up 19 percent compared with the same period last year.

The company said growth in the PC business allowed it to expand its market-share leadership for client computers to nearly 24 percent. It expects the market to “steadily recover and enter a new refresh cycle driven by AI PCs, gradually growing to represent around 80 percent of the PC industry landscape by 2027.”

In the Infrastructure Solutions Group, second-quarter revenue grew 65 percent year over year to $3.3 billion. The company noted that combined revenue from storage, software and services increased 35 percent to a “record high” while sales of its Neptune liquid-cooled servers rose 48 percent compared with the same period last year.

However, the company said losses in the business unit stood at $73 million in the first half of the fiscal year due to “high investment requirements for AI servers and lower profitability profile in the fast-growing cloud business.”

Lenovo noted that the data center business will “continue to strengthen” its business model for selling to enterprises and small to midsize businesses. These actions include “simplifying portfolios and improving operations as well as diversifying cloud service provider customers.”

The vendor also said that the Infrastructure Solutions Group will “continue to build differentiation with its industry-leading liquid cooling technology to meet the increasing performance and energy efficiency demands of AI workloads.”

“In addition, [the business unit] will continue to grow key strategic partnerships to develop hybrid AI infrastructure solutions,” it added.

In Lenovo’s Solutions and Services Group, second-quarter revenue grew 13 percent year over year to $2.2 billion, making this the unit’s 14th consecutive quarter of double-digit growth.

The company said revenue from managed services and project and solutions services increased 3 points year over year to account for nearly 60 percent of the division’s total revenue for the quarter.

The vendor said it experienced strong momentum from flagship offerings such as digital workplace solutions, hybrid cloud and sustainability solutions—three areas where it will “continue to embed AI” as part of its hybrid AI strategy.

“The global IT services market is expected to see steady double-digit growth over the next three years, with AI services growing more than twice as fast as the market to become the primary driver of the IT services market,” Lenovo said.