Lenovo posts record third quarter as AI revenue accelerates growth

Lenovo Group has reported a strong third quarter for fiscal year 2025/26, delivering record revenue, higher profitability, and rapid expansion of AI-related business. The results highlight how the company is positioning itself for long-term growth as AI adoption accelerates across devices, infrastructure, and enterprise services.

For the quarter ended 31 December 2025, Lenovo recorded group revenue of US$22.2 billion, an 18% increase year on year. All major business groups posted double-digit growth, marking the highest quarterly revenue in the company’s fiscal history. Adjusted net income rose 36% year on year to US$589 million, with the adjusted net income margin expanding to 2.7%. These figures exclude non-operating, non-cash items and one-off gains and charges, providing a clearer view of underlying performance.

The quarter reflected Lenovo’s ability to manage market volatility while continuing to invest in innovation. Rising component costs and supply constraints affected the wider technology industry, yet Lenovo maintained momentum by balancing operational discipline with portfolio expansion. AI-related revenue emerged as a central growth driver, increasing 72% year on year and accounting for 32% of total group revenue during the quarter.

AI-driven performance across Lenovo’s core businesses

Lenovo’s Intelligent Devices Group delivered a strong quarter, with revenue rising 14% year on year to US$15.8 billion. The group maintained industry-leading profitability despite ongoing supply challenges. The PC and smart devices segment grew revenue by 17%, with shipment volumes outperforming the broader market for the tenth consecutive quarter. Lenovo’s global PC market share reached 24.9% for the calendar year, the highest in its history, while quarterly share climbed to 25.2%.

Smartphone performance also strengthened, with Motorola achieving record volumes and activations during the quarter. Product announcements at Lenovo Tech World in January 2026 reinforced the company’s device strategy, including new Aura Edition PCs, updated ThinkBook models, and gaming-focused hardware. Lenovo also introduced Qira, a system-level personal ambient intelligence designed to operate across devices and respond to user context without requiring separate applications.

The Infrastructure Solutions Group posted a record quarter, with revenue rising 31% year on year to US$5.2 billion. Growth was supported by strong demand from cloud service providers, enterprise customers, and small and medium-sized businesses, alongside accelerating adoption of AI servers. The AI server pipeline reached US$15.5 billion, while revenue from Neptune liquid-cooling solutions grew 300% year on year as customers sought more efficient ways to manage AI workloads.

Restructuring, services growth, and long-term outlook

To better address long-term AI training and inferencing demand, Lenovo implemented a strategic restructuring of its Infrastructure Solutions Group during the quarter. This resulted in one-time restructuring charges of US$285 million. The company expects the streamlined cost structure, optimised product portfolio, and strengthened sales organisation to generate annual run-rate savings exceeding US$200 million over the next three years. These changes are intended to accelerate the group’s transition towards sustainable and profitable growth.

Lenovo’s Solutions and Services Group continued its consistent expansion, recording revenue of US$2.7 billion, up 18% year on year. This marked the nineteenth consecutive quarter of year-on-year growth for the division. Operating margin improved by 2.1 percentage points to over 22%, reflecting a shift towards higher-value services. Managed Services and Project and Solutions offerings together accounted for nearly 60% of the group’s revenue mix, as customers increasingly sought end-to-end support for hybrid AI environments.

Growth in services was particularly strong in sectors such as manufacturing, retail, transportation, sports, and smart cities, where organisations are moving AI initiatives from pilot phases into production. Demand for flexible consumption models also increased, driving higher adoption of Lenovo’s TruScale device-as-a-service and infrastructure-as-a-service offerings. At Lenovo Tech World, the company outlined the next phase of its Hybrid AI Advantage, including agent-based AI solutions and new platforms designed to help enterprises deploy and manage AI at scale.

Commenting on the quarter, Lenovo chairman and chief executive Yuanqing Yang said, “Lenovo delivered an outstanding performance across all fronts in the third fiscal quarter, with all main businesses achieving strong double-digit revenue growth and AI becoming a leading growth engine.” He added that the restructuring of the infrastructure business had set it “on a solid path toward sustainable and profitable growth,” while emphasising the company’s focus on hybrid AI as AI becomes more embedded in everyday life and enterprise operations.