Lenovo Posts Record US$26.9 Billion Quarterly Revenue As Infrastructure Business Nearly Doubles

Lenovo Group has reported first-quarter revenue of US$26.9 billion for fiscal year 2026/27, up 43 per cent year-on-year, with its infrastructure business nearly doubling and AI-related revenue reaching US$9.3 billion.

The company reported adjusted net income of US$1.075 billion, up 176 per cent and crossing the US$1 billion mark for the first time. However, on a GAAP basis, Lenovo reported a net loss of US$609 million for the quarter, reflecting the substantial impact of fair value changes, M&A-related charges, impairment costs and other non-cash items that are excluded from the company’s adjusted measure. Operating profit under GAAP fell 98 per cent to US$19 million, despite the revenue growth, as operating expenses rose 123 per cent year-on-year to US$4.4 billion.

Gross profit rose 60 per cent to US$4.5 billion, with gross margin improving 1.8 percentage points to 16.5 per cent. R&D spending increased 30 per cent to US$682 million.

Infrastructure was the growth engine

The Infrastructure Solutions Group (ISG) was the standout performer. Revenue nearly doubled, rising 98 per cent year-on-year to US$8.5 billion. Operating profit reached US$777 million with an operating margin of 9.1 per cent.

Lenovo attributed the growth to continued investment in cloud, edge and AI infrastructure, particularly AI inferencing workloads. Both the cloud service provider segment and the enterprise and SMB segment saw revenue close to doubling year-on-year.

In traditional compute, Lenovo rose to second globally in x86 server revenue. In AI compute, the company’s AI server pipeline expanded to US$54 billion, up 157 per cent quarter-on-quarter, which Lenovo attributed to accelerating AI infrastructure momentum and a widening customer base.

PCs and devices held share

The Intelligent Devices Group (IDG), which covers PCs, tablets and smartphones, posted revenue of US$17.1 billion, up 27 per cent year-on-year. Operating margin held at 7.1 per cent.

Lenovo’s global PC market share rose to 24.2 per cent, extending its lead over the second-placed vendor to more than five percentage points – a gap the company noted has widened for 10 consecutive quarters. In the AI PC segment specifically, Lenovo’s market share reached 25.1 per cent.

Tablet revenue grew more than 80 per cent year-on-year, while the smartphone business posted revenue growth of 15 per cent.

Services margins expanded

The Solutions and Services Group (SSG) reported revenue of US$2.9 billion, up 28 per cent year-on-year. Operating profit rose 39 per cent to US$697 million, with operating margin reaching 24.2 per cent.

AI services revenue grew at triple-digit rates year-on-year. Managed services and projects and solutions together accounted for more than 62 per cent of SSG’s revenue, and the company’s TruScale as-a-service offering grew 35 per cent. Solutions tailored to vertical industries including sports, manufacturing and retail contributed 50 per cent revenue growth in the projects and solutions segment.

AI revenue now 35 per cent of total

Across the group, AI-related revenue – which Lenovo defines as PCs and smartphones with neural processing units, GPU servers and AI-enabling services – grew 60 per cent year-on-year to US$9.3 billion, accounting for 35 per cent of total group revenue.

Chairman and CEO of Lenovo, Yuanqing Yang, characterised the results as validation of the company’s strategy.

“Building on our leadership in PCs and smart devices, we are proud of our rapid emergence as a global leader in AI and infrastructure – a clear validation of our strategic foresight,” Yang remarked. “Powered by our Hybrid AI strategy, operational excellence and relentless innovation, Lenovo is not only navigating market cycles but also seizing initiatives to win.”

The GAAP versus adjusted gap

The divergence between Lenovo’s adjusted and GAAP results is worth noting. While the company highlighted adjusted net income of US$1.075 billion, the GAAP result was a net loss of US$609 million – a gap of approximately US$1.7 billion.

The adjusted measure excludes fair value changes on financial assets, amortisation of intangible assets resulting from mergers and acquisitions, M&A-related charges, impairment and write-off of assets, fair value changes on derivative financial liabilities relating to warrants, notional interest on convertible bonds and impairment of interests in associates, along with corresponding tax effects.

Operating expenses under GAAP rose 123 per cent year-on-year to US$4.4 billion, substantially outpacing the 43 per cent revenue growth. The expenses-to-revenue ratio expanded from 10.6 per cent to 16.5 per cent. The GAAP loss per share was 5.04 US cents, compared with earnings of 4.12 US cents in the prior-year quarter.

Supply chain as competitive advantage

Lenovo positioned its supply chain as a factor in the quarter’s performance, noting that its scale, supplier relationships and end-to-end operating model allowed it to manage supply constraints and cost pressures during a period of industry-wide disruption. The company operates more than 30 factories across 11 markets globally.

The company was ranked fifth globally in the Gartner Supply Chain Top 25 for 2026, its highest placement, up from eighth in 2025. It also climbed 43 places to number 153 in the Fortune Global 500 list.

During the quarter, Lenovo expanded its North Carolina campus with additional server manufacturing capacity aimed at capturing demand from hyperscalers and enterprise customers. The company also served as an Official Technology Partner for the FIFA World Cup 2026, providing devices, infrastructure, services and AI solutions across the tournament’s 16 host cities.

Outlook

Lenovo reported that its AI server pipeline of US$54 billion provides forward visibility into continued demand. The company invested US$682 million in R&D during the quarter, a 30 per cent increase, and indicated it intends to continue investing in AI capabilities across its device, infrastructure and services portfolios.

The company did not provide specific revenue guidance for the full fiscal year.

Last Updated on August 13, 2026 by Nick Ross