Lenovo Q1 revenue jumps 43% to $26.9B, highest in 5 years

China’s Lenovo Group reported a 43% year-on-year increase in first-quarter revenue to $26.94 billion, marking the company’s strongest quarterly revenue growth in five years and beating market expectations. The world’s largest PC maker benefited from strong demand for artificial intelligence hardware, resilient computer sales and higher memory-chip prices amid a global supply shortage.

The results underline Lenovo’s transformation from a company primarily associated with personal computers into a broader computing and infrastructure provider. AI-related revenue increased 60% year-on-year to $9.3 billion during the quarter, accounting for about 35% of total group revenue. At the same time, the company is benefiting from its position across PCs, smartphones, tablets, servers and enterprise technology as businesses accelerate spending on AI infrastructure.

Lenovo Revenue Beats Expectations

For the three months ended June 30, Lenovo generated $26.94 billion in revenue, significantly above analysts’ average expectation of $22.3 billion.

The result represents the company’s highest quarterly revenue growth rate in five years and its strongest quarter in terms of overall revenue. Lenovo said all of its major business groups delivered record fiscal first-quarter revenue and operating profit.

Lenovo Q1 FY2026/27	Result
Revenue	$26.94 billion
Year-on-year growth	43%
Analyst expectation	$22.3 billion
AI-related revenue	$9.3 billion
AI revenue growth	60%
AI share of total revenue	35%
Adjusted net income	$1.075 billion
Reported net income attributable to shareholders	-$609 million

Despite the strong operating performance, Lenovo reported a $609 million net loss attributable to shareholders, compared with a $505 million profit a year earlier. The loss was primarily linked to a non-cash fair-value loss of $1.7 billion arising from the revaluation of warrants issued in 2025.

Excluding such items and other non-cash charges, adjusted net income more than doubled to $1.075 billion.

AI Becomes a Major Growth Engine

Artificial intelligence has become one of the biggest drivers of Lenovo’s expansion.

The company generated $9.3 billion in AI-related revenue during the quarter, up 60% from the same period a year earlier. AI-related business accounted for approximately 35% of total revenue, showing how quickly the technology has moved from an emerging product category into a substantial part of Lenovo’s business.

Lenovo is benefiting from demand across several layers of AI computing.

Its portfolio includes AI-enabled personal computers, enterprise servers, data-centre infrastructure and other hardware used by businesses deploying AI applications.

The company’s infrastructure business is particularly important because AI workloads require significantly more computing capacity than conventional enterprise applications.

AI Server Pipeline Expands

Lenovo’s AI server order pipeline reached $54 billion, representing a 157% increase from the previous quarter, according to company earnings information cited in reports. The pipeline reflects demand from hyperscalers, AI cloud providers and enterprise customers.

This provides Lenovo with a substantial opportunity beyond its traditional PC business.

As companies invest in AI inference and data-centre infrastructure, demand is expanding for servers capable of running AI workloads after models have been trained. Lenovo has been increasingly targeting this market as part of its broader diversification strategy.

PC Business Remains Important

Despite the rapid expansion of AI infrastructure, personal computers remain central to Lenovo’s business.

The company’s PC, tablet and smartphone division accounted for approximately 64% of group revenue and recorded 27% year-on-year revenue growth during the quarter.

Lenovo also maintained its position as the world’s largest PC maker.

However, the broader PC market is facing an unusual combination of strong underlying demand and rising component costs. Memory chips, particularly DRAM and NAND, have become significantly more expensive as AI data centres consume increasing amounts of memory and storage capacity.

The resulting supply constraints are forcing computer manufacturers to reconsider pricing and product configurations.

Memory Shortage Creates Both Risk and Opportunity

The global memory shortage is a major factor behind Lenovo’s latest results.

Demand from AI data centres has tightened supplies of memory chips used in servers, PCs, smartphones and other electronic devices. Memory prices have risen sharply, increasing production costs for hardware manufacturers.

Lenovo has responded by raising PC prices to offset higher component costs.

Its diversified supplier base, which includes Chinese memory producers, has also helped the company manage supply pressures, according to comments from CEO Yang Yuanqing reported by Reuters.

However, higher memory prices remain a potential constraint on the wider PC industry.

Counterpoint Research data cited by Reuters showed global PC shipments declined 2% year-on-year in the second quarter to 16.6 million units, marking the first decline since the first quarter of 2025.

Lenovo nevertheless retained the market lead with a 25.6% share.

AI Hardware Is Changing Lenovo’s Business Mix

Lenovo’s latest results show how AI is changing the economics of the hardware industry.

Traditional PC companies once depended primarily on shipment volumes and consumer upgrades. The AI boom has added higher-value enterprise hardware, servers and infrastructure to the opportunity.

That diversification can make Lenovo less dependent on the cyclical PC market.

The company is now positioned across multiple parts of the computing ecosystem:

• AI PCs: Computers equipped with processors designed to run AI workloads locally.
• AI servers: Hardware used by cloud providers and enterprises for AI training and inference.
• Enterprise infrastructure: Servers and systems supporting corporate workloads.
• Smartphones and tablets: Consumer devices incorporating increasingly advanced AI capabilities.
• Services: Software, support and enterprise solutions that complement hardware sales.

The combination gives Lenovo more opportunities to capture spending as businesses upgrade their technology infrastructure for AI.

Research and Development Spending Rises

Lenovo is also increasing its investment in research and development.

The company’s R&D expenses increased 30% year-on-year during the quarter.

The higher spending reflects the need to develop products suited to an increasingly AI-centric computing market.

For Lenovo, the competitive landscape is no longer limited to traditional PC manufacturers. The company must also compete with server specialists and other technology providers seeking to benefit from enterprise AI spending.

Investment in AI hardware, software and related services will therefore remain important to maintaining its position.

Lenovo Shares Surge After Results

Investors responded strongly to the results.

Lenovo’s shares had already risen sharply during 2026, reaching an all-time high before the earnings announcement. Following the results, the stock gained as much as 17% during Thursday trading. Its year-to-date gains had reached roughly 225% before the post-results surge, according to Reuters.

The market reaction reflects investor enthusiasm for companies that can benefit from the AI infrastructure boom without being directly involved in developing foundation models.

Lenovo’s strong results suggest that the AI investment cycle is increasingly flowing through the hardware supply chain.

The Challenge of Rising Costs

Lenovo’s performance also highlights an important tension in the current technology market.

AI is creating enormous demand for computing hardware, but that demand is simultaneously increasing the cost of critical components.

Memory is a particularly important example. Data centres require large amounts of high-performance memory, putting pressure on supplies available for PCs and other consumer electronics.

For manufacturers such as Lenovo, maintaining growth will therefore depend not only on selling more products but also on managing component costs, securing supplies and passing some increases on to customers without significantly damaging demand.

What Lenovo’s Results Mean for the AI Hardware Market

Lenovo’s numbers provide another indication of the scale of the AI infrastructure cycle.

The company’s $9.3 billion in AI-related revenue demonstrates that AI is already contributing materially to the financial performance of a major global hardware manufacturer. Its rapidly expanding server pipeline provides an indication of how much additional spending could enter the market as enterprises and cloud providers expand their AI capabilities.

At the same time, the memory shortage shows that the AI boom is creating bottlenecks across the wider technology supply chain.

The consequences are likely to extend beyond servers and data centres, affecting the prices and availability of consumer electronics as manufacturers compete for the same components.

Looking Ahead

Lenovo’s record first-quarter revenue growth shows that its strategy of combining its traditional PC business with AI infrastructure, enterprise hardware and services is gaining momentum. The 43% revenue increase and 60% growth in AI-related revenue demonstrate the company’s growing exposure to the global AI spending cycle.

The next challenge will be converting that demand into sustainable profitability while managing the rising cost of memory and other components. With AI server demand accelerating and the PC market facing supply-driven pricing pressure, Lenovo’s ability to balance growth, margins and supply-chain resilience will be critical to maintaining its momentum through the remainder of fiscal 2026/27.