Lenovo Q1 Sales Up 20 Percent As CEO Says 'Hybrid AI' Will Dominate Future

'Now more clearly than ever, we are seeing that public AI alone cannot address the increasing needs of either individuals or enterprises,' Lenovo CEO Yuanqing Yang said in announcing first quarter earnings on Thursday. 'Hybrid AI, which is formed by personal AI, enterprise AI, together with public AI, is indeed the way forward.’

Lenovo said its revenue soared 20 percent year on year to $15.4 billion in its latest quarter and it achieved that growth while improving net income by 65 percent, CEO Yuanqing Yang announced Thursday in a prepared statement.

“We delivered a solid performance in our first quarter, with all of our businesses improving profitability and growing faster than the market. As the trend of hybrid AI is becoming more clear, we also made important progress in strengthening our capabilities to capture this major opportunity,” CEO Yuanqing Yang stated in prepared remarks. “This performance and progress, together with a recovering global IT market, significantly boost our confidence to accelerate our transformation and further improve our performance in the coming quarters.”

Lenovo’s net income increased to $315 million for the quarter. Lenovo’s infrastructure group said it drove historically high revenue led by the Cloud Service Provider business, and delivered a 65 percent year on year growth.

In the AI arena, Lenovo, with dual headquarters in Beijing and Morrisville, N.C., said its Intelligent Device Group has delivered double-digit revenue growth, and “leading profitability,” the company said in prepared remarks. Users are taking a hybrid approach to adopting AI, Lenovo said, with customers using both public models such as Anthropic, Llama-3, and OpenAI as well as building private models that use their own data and hardware.

“Now more clearly than ever, we are seeing that public AI alone cannot address the increasing needs of either individuals or enterprises,” he said. “Hybrid AI, which is formed by personal AI, enterprise AI, together with public AI, is indeed the way forward. As the outlook becomes more evident, major ecosystem players are accelerating the development and application of personal AI agent and enterprise AI agent, which is creating enormous growth opportunities across devices, infrastructure, solutions and services.”

On the infrastructure side of the business, Lenovo said its combined revenue from Storage, Software and Services grew at almost 6 percent year on year and set a new record.

“Moreover, revenue from our Neptune liquid cooled servers with unique sustainability benefits grew more than 50 percent year on year to a record high,” ‘Yang stated.

Lenovo said it’s going after share in the ISG market by simplifying portfolios and improving operations and optimizing the business model for enterprise, as well as the SMB customers.

“We will continue to leverage our industry-leading liquid cooling technology to meet increasing demands for AI workloads, while at the same time capture the growth opportunities in AI servers and storage markets,” Yang said. “And we will continue to grow key strategic partnerships and build infrastructure platforms that support hybrid AI solutions.”

Meanwhile in the PC category, where Lenovo holds a dominant number one market position over Dell and HP, Yang said the company continued making PCs within “industry-leading profitability,” margins.

He said Lenovo expects the PC market to hit a refresh cycle driven by AI PCs, which will represent more than 50 percent of the PC market by 2027.

“We will continue to deliver groundbreaking innovations to achieve the full potential of personal AI agent, while leveraging on deepened strategic partnerships to build a more diversified portfolio and a richer ecosystem,” Yang stated.