Lenovo Group Ltd. posted quarterly profits that beat projections. The Chinese tech giant saw net income in the October-December 2024 quarter more than double the previous year’s $692.7 million, beating analyst expectations of $365 million.
Revenue increased 20% year-on-year to $18.8 billion, signaling a break from the prolonged industry-wide downtrend. Lenovo’s performance is linked to the company’s increased expenditure on AI infrastructure.
AI-powered optimism propels Lenovo to market lead
Lenovo saw an increase in sales after years of stagnation in the personal computer (PC) market due to its advancements in AI-powered computing. The AI hype has given other major PC brands renewed optimism. The recent financials support Lenovo’s emerging dominance over competitors HP Inc. and Dell Technologies Inc., both of which are trying to capitalize on AI’s potential.
According to IDC, Lenovo shipped 16.9 million PCs globally in Q4 2024, maintaining a strong lead over HP at 13.7 million and Dell at 9.9 million. Lenovo now accounts for 24.3% of the PC market share worldwide.
Ryan Reith, group vice president of IDC’s Worldwide Device Trackers, said, “On-device AI for PCs is inevitable. Therefore, right now it is about suppliers trying to be patient as their customers are dealing with headwinds unrelated to these technological advancements.”
In November 2024, Lenovo’s CEO, Yang Yuanqing, raised the shipment outlook for 2025 to double-digit growth from a previously estimated growth of 5% to 10%, predicting that AI features will drive growth in 2025.
The PC maker has doubled down on AI-enabled PCs and the replacement cycle expected from Windows 11 adoption. Lenovo recorded over $692 million in net income in Q4 2024, beating the initially projected $365 million, with a 20% year-on-year increase in revenue to $18.8 billion.
Rivals’ performances: AI winners and losers
Other large tech firms have also benefitted from the AI boom. For example, Nvidia, the leader in AI chip-making, watched its stock soar by almost 250% in the past year as demand for its GPUs kept rising. Microsoft and Google have also reaped AI dividends by monetizing their existing cloud businesses to sell AI services to enterprises looking for computing power solutions.
In contrast to Lenovo’s success, it’s been a rough ride for PC manufacturers who are slow to adopt AI. Traditional PC manufacturers like Acer and ASUS do not seem to be enjoying any meaningful revenue growth in 2024. Intel was a traditional mainstay in semiconductor manufacturing. However, it has lost a lot of ground in AI computing markets to competitors like Nvidia and AMD.
The decline in enterprise spending on traditional servers has hurt other legacy hardware vendors like IBM and Hewlett Packard Enterprise (HP).
However, analysts expect PC makers like HP and Dell to make a comeback and see significant growth in 2025 as customers begin to demand more devices with AI features.
Lenovo, HP, and Dell are touting ambitious AI products to entice customers to upgrade their existing devices to the brand-new premium product category. The development of AI platforms like DeepSeek has further consolidated the enthusiasm for AI products like AI PCs, especially among Chinese manufacturers.
As of this moment, Lenovo seems to have established itself as the prime early beneficiary of the AI momentum in the PC space. However, US tariffs on electronics from China and uncertainty on the global economic horizon could clip the wings of high fliers like Lenovo.
Moreover, AI-powered PCs for the mainstream consumer are still not proven commodities, with limited applications apart from niche productivity tools.
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