Lenovo just reported a record quarter, with absolutely insane demand for artificial intelligence infrastructure helping push revenue to an all-time high. However, there is an important wrinkle hiding behind the company’s adjusted profit numbers.
For the first quarter of Lenovo’s 2026/27 fiscal year, revenue reached $26.9 billion, an increase of 43 percent from $18.8 billion during the same period last year. Lenovo says this represents its highest quarterly revenue ever and its strongest first fiscal quarter across all of its business groups.
AI is becoming a particularly large piece of Lenovo’s business. The company generated $9.3 billion from AI-related products and services during the quarter, an increase of 60 percent year over year. AI now accounts for roughly 35 percent of Lenovo’s total revenue.
Lenovo defines that category broadly, however. Its AI-related revenue includes PCs and smartphones equipped with neural processing units, GPU servers, and services designed to help customers build and manage AI systems. In other words, the $9.3 billion figure should not be interpreted as revenue from generative AI alone.
Lenovo’s AI server business is booming
The biggest growth came from Lenovo’s Infrastructure Solutions Group. Revenue nearly doubled, increasing 98 percent year over year to a record $8.5 billion.
Operating profit for the infrastructure division reached $777 million, while its operating margin climbed to 9.1 percent. Lenovo says revenue from both cloud service providers and enterprise and small business customers nearly doubled.
Perhaps the most eye-catching number is Lenovo’s AI server pipeline. The company says it has expanded to $54 billion, representing an increase of 157 percent from the previous quarter.
Lenovo also says it has climbed to second place globally for x86 server revenue. The company is betting heavily on AI inference, where businesses run trained AI models rather than performing the enormously expensive work of training them from scratch.
PCs remain a huge part of Lenovo’s business
Lenovo hasn’t abandoned the PC market while chasing AI infrastructure dollars. Its Intelligent Devices Group generated $17.1 billion in revenue, up 27 percent from the previous year.
Revenue from PCs and smart devices increased nearly 30 percent. Lenovo says its worldwide PC market share reached 24.2 percent, putting it more than five percentage points ahead of its closest competitor.
The company also claims a 25.1 percent share of the AI PC market. As with Lenovo’s broader AI revenue numbers, that statistic deserves some context since the industry increasingly categorizes computers containing NPUs as AI PCs regardless of how heavily buyers actually use their AI capabilities.
Other device categories performed well too. Lenovo says tablet revenue jumped more than 80 percent year over year, while its smartphone business recorded its best first-quarter revenue with growth of 15 percent.
Lenovo’s services business keeps growing
Lenovo’s Solutions and Services Group generated a record $2.9 billion in quarterly revenue, increasing 28 percent year over year.
Operating profit increased 39 percent to $697 million, while operating margin reached 24.2 percent. Lenovo says AI services revenue grew at a triple-digit rate as customers moved AI projects from experiments into production.
Its TruScale infrastructure-as-a-service business grew 35 percent, while managed services and project-based solutions represented more than 62 percent of the division’s revenue.
Lenovo also increased its research and development spending during the quarter. R&D expenses reached $682 million, up 30 percent from $524 million a year earlier.
There is a big catch in Lenovo’s profit numbers
Despite all of those records, Lenovo’s financial results contain an important distinction.
The company reported adjusted net income of $1.075 billion, up 176 percent year over year. That is the figure Lenovo emphasizes in announcing that adjusted profit surpassed $1 billion for the first time.
Under its reported financial results, however, Lenovo recorded a $609 million net loss attributable to shareholders. A year earlier, it reported net income of $505 million.
Operating profit also fell dramatically, dropping 98 percent from $785 million to just $19 million. Lenovo reported a pre-tax loss of $180 million and an overall loss for the period of $478 million.
The difference comes from Lenovo’s non-HKFRS adjustments, which exclude several items, including certain fair-value changes, acquisition-related expenses, intangible asset amortization, impairments, and costs associated with convertible bonds.
Adjusted figures can provide useful insight into an underlying business, but a gap of roughly $1.7 billion between Lenovo’s adjusted net income and reported net loss is far too large to overlook.
There is little question that Lenovo is growing rapidly. Revenue is up 43 percent, infrastructure revenue has nearly doubled, and AI-related products and services now generate billions of dollars every quarter. With all of that said, investors and customers looking at Lenovo’s self-described strongest quarter ever should probably read beyond the headline numbers.
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