Lenovo's shares surge 20pc after posting more-than-doubled adjusted net profit

Shares of Lenovo (0992) surged as much as 20 percent at a time 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.

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.

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.

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.

Lenovo's strong performance comes after the company warned earlier this year of pressure on PC shipments as the industry grapples with a memory chip shortage that is getting more severe. It has also raised PC prices to mitigate the impact of soaring memory costs.

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

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