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Shares of Lenovo (0992) surged as much as 20 percent to a fresh peak on Thursday after it posted 176 percent growth in quarterly adjusted net profit from a year ago, as the Chinese firm rides an artificial intelligence hardware boom and reaps the benefits of a global memory chip shortage.
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Adjusted net income for the quarter ended June, which excludes one-off items and non-cash charges, stood at US$1.08 billion (HK$8.42 billion), marking the firm's first time to surpass US$1 billion.
However, the company swung to a net loss of US$609 million from a profit of US$505 million last year, compared to the average analyst estimate of US$589 million profit, according to data compiled by LSEG. The company said the loss was primarily due to a non-cash fair value loss of US$1.7 billion arising from the revaluation of warrants issued in 2025.
Lenovo's revenue advanced 43 percent year-on-year to US$26.94 billion, beating analyst expectations of US$22.3 billion, as the consumer electronics hardware giant benefited from artificial intelligence-driven demand and solid PC sales.
It was the group's highest quarterly revenue growth in the last five years, as AI-related revenue grew 60 percent year-on-year to US$9.3 billion, accounting for 35 percent of total revenue in its fiscal first quarter.
"We accurately anticipated supply shortages and cost increases (of memory chips), and addressed it successfully," Yang told Reuters.
He attributed the success to the firm's scale, resilient global supply chains and diversified memory supply from China, South Korea and the United States.
"I'm very confident in sustaining this growth momentum and driving long term profitability," he said, adding that Lenovo is on track to reach revenue of US$100 billion this fiscal year.
Its AI server pipeline reached US$54.0 billion, up 157 percent quarter-over-quarter, reflecting demand from hyperscalers, AI cloud and enterprise AI clients, its earnings report said.
"It's clear that we are becoming a global AI infrastructure leader as well," chief executive Yang Yuanqing said, adding that he believed Lenovo can maintain its AI-led growth momentum this year.
Lenovo's PC, tablet and smartphone division, which accounted for about 64 percent of total revenue, reported a 27 percent increase in revenue during the period.
Global PC shipments declined by 2 percent in the second quarter of 2026 to 16.6 million units for the first time since Q1 2025 due to memory-driven cost pressures, according to Counterpoint Research.
Lenovo retained its market lead in the second quarter, giving it a market share of 25.6 percent.
"We believe this will still be the trend in the second half of this year," Yang said in response to the decline in unit shipments, adding that the firm is growing sales of non-PC devices such as tablets.
Lenovo has raised PC prices twice this year to mitigate the impact of soaring memory costs.
"From a unit point of view, (PC) demand will be constrained, but because every average selling price is going higher or we are shifting to a premier price band, that helps us drive revenue growth."
He said the company was developing more powerful AI-enabled PCs and edge computing devices that can run AI models as global demand increases for personal AI devices.
Its US competitors Dell, Hewlett Packard and Super Micro have been some of Wall Street's best performers this year but have raised prices by 10 percent to 30 percent due to soaring NAND and DRAM memory chip costs.
Reuters and staff reporter
