Net profit attributable to shareholders dropped to $546 million for the three months ended December 31. That figure was still above market expectations, with analysts surveyed by LSEG forecasting an average of $451.29 million.

When one-off items and non-cash charges were excluded, adjusted net profit rose 36% to $589 million, pointing to stronger underlying performance despite pressure on margins.

Revenue for the quarter climbed 18% year-on-year to $22.2 billion, with all of Lenovo’s business groups recording double-digit growth. The company said this was its highest quarterly revenue to date.

Profit margin improved to 2.7%, although restructuring costs continued to weigh on reported earnings.

Growth in artificial intelligence-related products and services was a key driver. Lenovo said AI-related revenue surged 72% from a year earlier and now accounts for 32% of total revenue. This includes AI devices, infrastructure and services.

The company’s Intelligent Devices Group, which houses its personal computer business, posted revenue of $15.8 billion, up 14% year-on-year. Lenovo’s global PC market share rose to a record 24.9% during the quarter.

Lenovo also disclosed that its Infrastructure Solutions Group took $285 million in restructuring charges. The restructuring plan is expected to deliver annual cost savings of $200 million over the next three years.

The company said it continues to push its hybrid AI strategy, including the rollout of its “Lenovo Qira” super agent and deeper collaboration with Nvidia, as it seeks to drive long-term growth across hardware and AI-led services.

The world’s largest PC maker earned $90 million in net profit for the quarter ending 31 March. Analysts had projected more than double that figure, with expectations set at roughly $225 million.

Nonetheless, revenue surged to $16.98 billion, surpassing the $15.6 billion target set by analysts. The increase, driven largely by sales in personal devices and infrastructure solutions, provided a brief reprieve from the pressure weighing on the company.

We can see that Lenovo’s financial picture is complicated. On the one hand, there’s rapid growth: server-related revenue rose 64% year-on-year, while cloud service offerings grew 22%, pulling in $2.2 billion. 

On the other hand, profitability is being dragged down by losses on financial instruments and narrowing margins in its infrastructure business.

The company’s ability to stay competitive globally is being tested by trade risks, especially with the United States. As a business that depends heavily on Chinese manufacturing while generating more than a third of its revenue from the Americas, Lenovo finds itself in a delicate position.

PC shipments grew 11% in the first quarter of 2025, according to market researcher IDC. The increase was driven in part by businesses and consumers rushing to place orders ahead of incoming U.S. tariffs on Chinese goods. That urgency might not last.

“The uncertainty surrounding U.S. tariffs and associated inflationary pressure could hurt PC demand in the subsequent quarters of 2025,” IDC warned in its report. 

Citi analysts also noted that price adjustments on consumer products may be speedy, but renegotiating contracts on commercial systems, which account for nearly 70% of U.S. sales, will take time.

Lenovo’s recent launch of AI-integrated PCs helped lift its smartphone and tablet business. CEO Yang Yuanqing sees this shift as key to the company’s next phase. “This has been one of our best years yet, even in the face of significant macroeconomic uncertainty,” he said.

Annual revenue hit $69.08 billion, the second-highest in Lenovo’s history, while full-year profit rose 37%. Still, its Hong Kong-listed shares dropped more than 2% after the results were released, another reminder that investors are watching profit margins more closely than sales figures.

The firm insists it’s prepared for whatever comes next. “Our global manufacturing footprint and diverse supply chain give the group maximum flexibility and resilience to navigate through uncertainties,” Lenovo stated.

But flexibility has its limits. Analysts agree that the company’s exposure to tariff-related shocks could continue to disrupt both short-term performance and long-term planning.