• Lenovo reported 20% YoY growth in its revenue in Q4 2024, driven by a focus on AI, operational excellence, and strategic foresight.
• Lenovo emphasized continuous R&D investments, particularly in AI, to further strengthen its market position across devices, services and infrastructure.
• Lenovo is optimistic about its Infrastructure Solutions Group’s (ISG’s) sustained profitability, targeting $10 billion from the Cloud Service Provider (CSP) business.

Lenovo Group reported its FY Q3 2025 earnings last week. Lenovo’s FY Q3 2025 quarter ended on December 31, 2024. As such, in this report, we will refer to the calendar quarter, Q4 2024.

Lenovo reported $18.8 billion in its Q4 2024 revenues, a 5% QoQ and 20% YoY increase which beat Wall Street’s estimate of $17.9 billion. Q4 2024 marks the fifth YoY increase after five straight quarters of YoY declines. Lenovo generated a net income of $695 million during the quarter, a 94% QoQ and 106% YoY increase. The company noted that in Q4 2024, more than 46% of the revenue mix was unrelated to PCs, similar to Q3 2024. This was due to 59% YoY revenue growth from the Infrastructure Solutions Group (ISG) and double-digit YoY revenue growth from smartphones. As we show in our Monthly Flagship Smartphone Display Tracker, during the October-December period, the Motorola Razr 50 and Razr 50 Ultra were consistently among the top five foldable OLED smartphone models. Also, our Advanced IT Display Shipment and Technology Report shows Lenovo had a high-double-digit share in 2024 for OLED and MiniLED notebook PCs.

During the earnings call, Lenovo Chairman and CEO Yuanqing Yang stated, “Lenovo’s revenue and profit both achieved significant growth last quarter, with strong performance across all core businesses. Notably, the ISG business returned to profitability and the smartphone business experienced rapid growth. AI technology, with higher efficiency and lower costs, is accelerating the maturation of personal AI, particularly on-device AI and edge AI. It has also accelerated enterprise adoption of AI. This aligns perfectly with the direction of hybrid AI we've been driving and leading. Looking ahead, our continued investment in innovation, combined with our exceptional and resilient global operations, positions us well for sustained and profitable growth in the future.”

In Q4 2024, in terms of revenue growth by region, the Asia-Pacific region excluding China saw its revenue grow 31% YoY, the highest growth rate among all regions. This was made possible by the double-digit YoY increases in each of the three business segments. IDG witnessed strong demand for high-end products, thanks to the Windows 11 refresh in Japan and an upswing in gaming interest throughout the region. Concurrently, ISG’s market share expanded, while SSG secured a major case win with a leading APAC airline, leveraging its GenAI-powered Care of One platform. China saw a 21% YoY revenue increase, primarily driven by a recovery in ISG sales. ISG’s performance was largely fueled by market share gains from its improved infrastructure portfolio and effective supply chain management. The region's PC sales exhibited solid demand for premium models, demonstrating the Group’s resilience in driving growth through higher average selling prices (ASPs). In the Americas, the Group’s revenue climbed by 20% YoY, reflecting a strong recovery in both consumer and enterprise PC sales. The ISG division also delivered robust growth, underscoring the company’s ability to leverage its core strengths to meet demand, including those for AI solutions. The Europe-Middle East-Africa (EMEA) market experienced an 11% YoY sales increase. The IDG and SSG businesses maintained their strong momentum, while ISG thrived on heightened demand from new billion-dollar cloud customers, who require the building of local data centers to meet booming demand and comply with regional data security regulations.

In terms of revenue growth by business segment, IDG, which includes the PC, tablet, smartphone and other smart devices businesses, grew 12% YoY. The segment’s profitability reached 7.3% during the quarter, remaining at the upper end of its historical range. Gaming PC sales performed exceptionally well during the holiday season, reflecting a consumer shift toward high-performance PCs to enhance the gaming experience. Commercial sales benefitted from the Windows 11 refresh, with premium workstation sales spearheading demand recovery in the commercial segment. At the 2025 CES, Lenovo showcased over 60 innovations that redefine AI device categories across commercial, gaming and consumer segments, furthering its vision of building an advanced hybrid AI ecosystem. With CPU and PC vendor roadmaps incorporating on-device AI across various price bands and featuring enhanced computing power, AI PCs are becoming more accessible and are projected to dominate global shipments by late 2025. The Group's Motorola-branded revenue experienced double-digit growth YoY and continued to gain global market share for the sixth consecutive quarter. Geographical expansion has been a crucial catalyst for this growth, with sales outside of the Americas now accounting for 44% of its revenue, a significant increase from just 18% two years ago.

Lenovo also mentioned that they are progressing towards establishing a $10 billion businesses with sustainable profitability by optimizing scale in the profitable CSP segment and enhancing cost efficiency for ESMB and ISG toward building a sustainable and profitable growth trajectory. Lenovo is leveraging the skill that they have built with CSP to improve the cost effectiveness of their ESMB business, and ultimately secure the sustainable profitability of their ISG business.

During the Q&A, there were several questions that were very germane given the ongoing plans to impose or increase import tariffs, and the fuel that is expected to drive growth for the PC category in 2025 and beyond. On the issue of the Trump administration proposing to impose tariffs ranging between 10% and 25% on Canada, Mexico and China, Lenovo said it was still assessing the impact, but overall, it did not think it would have any significant impact on its business and future performance. Lenovo noted that these issues were not new to the Group, as so many other countries had similar tariff policies, like Brazil and India. Lenovo noted that it had already built a very strong and unique business model – ODM+. Under this model, Lenovo does both in-house manufacturing and outsourced manufacturing. Besides, it has a global manufacturing footprint, with more than 30 facilities in around 10 countries including Argentina, Brazil, India, Japan, Hungary, Germany, Mexico and the US. As a result, Lenovo believes that compared to the competition, it is more flexible and resilient to adapt to different scenarios.

Another question was asked regarding the IDG business outlook. Does Lenovo see an upside in the new gaming PC cycle? Has the replacement cycle of Windows 10 already started? Lenovo responded that going into the new financial year, it had strong confidence in its PC business trajectory. The Group has modeled the market to grow from mid-single digit to high-single digit. And within this context, it is planning to continue to grow in the premium market, hence gaining a share on top of the market growth. Lenovo expects to see tailwinds from the large installed base due for replacement, and Windows 10 end of service. As a result, and along with the rise of AI PCs, Lenovo expects the market growth to accelerate in the second half of calendar 2025.

Over the past few weeks, DeepSeek has made headlines and Lenovo was asked about its cooperation and collaboration with DeepSeek for its device and infrastructure business. Lenovo responded that based on its assessment, DeepSeek had a very positive impact on them, further proving that Lenovo’s hybrid AI had always been the right strategy and the Group had been on the right path by deploying distilled small models for local devices at the edge. DeepSeek improved AI efficiency, driving the democratization of AI and uplifting the potential of locally deployed AI models to support the wide adoption of edge AI and on-device AI. As a result, it may also indirectly boost the growing demand for GPU servers. All of these are aligned with Lenovo’s hybrid AI strategy and will benefit all of its businesses. Lenovo is launching an AI workstation deploying a local DeepSeek-R1 distilled model with up to 7 billion parameters. This is a model size that just a few years ago could only be run on public cloud platforms like Chat-GPT 3.0. But today, Lenovo can do it entirely locally. This can enhance every individual’s productivity while protecting their data and privacy. On the enterprise AI side, DeepSeek has proven that AI deployment is not necessarily expensive and made the ROI case more convincing. So, this would help change enterprise customers' perspectives and accelerate adoption. As such, Lenovo expects the broader use of AI solutions to create more opportunities for its hybrid AI advantage and drive growth in its ISG and SSG businesses.

Q4 2024 by business segments

• The Intelligent Devices Group (IDG) accounted for $13.8 billion in revenues, a 2% QoQ and 12% YoY increase due to smartphone revenues achieving double-digit YoY growth, setting a fiscal third-quarter record for the last nine years. Its market ranking reached a five-year high outside of China, driven by strong growth in the Asia-Pacific and EMEA regions. The IDG business segment includes PCs, tablets, smartphones and other smart devices for consumer and commercial customers. Operating margin was 7.3%, similar to Q3 2024.
• The Infrastructure Solutions Group (ISG) accounted for $3.9 billion in revenues, a 19% QoQ and 59% YoY increase. The ISG business includes a fully integrated ODM+ (Original Design Manufacturer) business model and solutions, including motherboard design and system and full-rack assembly across server, storage and other products.
• The Solutions and Services Group (SSG) accounted for $2.3 billion in revenues, a 4% QoQ and 12% YoY increase. The SSG business segment was created in Q2 2021. It is focused on developing software and projects for four scalable verticals – Smart City, Smart Education, Smart Retail and Smart Manufacturing.

Source: Lenovo FY Q3 2025 earnings presentation

For FY Q4 2025 (CY Q1 2025) guidance, Lenovo notes that at the heart of the innovations showcased at CES 2025, are its investments in on-device and agentic AI, which leverages the power of AI to deliver personalized, productive and protected solutions to empower users to redefine business experiences across multiple categories. These new innovations will enable the Group to deliver both enterprise and personal AI solutions, creating a comprehensive full-stack portfolio to transform industries and empower individuals. These critical AI innovations are supported by a strong focus on research and development (R&D), the expenditure on which increased 14% YoY and 7% from two years ago. Despite geopolitical tensions affecting the technology sector, the Group’s business has demonstrated remarkable resilience. Lenovo’s success in navigating market challenges can also be attributed to its strategic expansion into the Middle East, further enhancing its extensive global manufacturing footprint.

Wrapping up

• Lenovo’s strong financial results in FY Q3 2025 demonstrated a clear focus on AI-driven growth. All business units had record-breaking revenues fueled by AI PCs, servers, services and solutions. Lenovo’s diversified global manufacturing footprint may soften the planned tariff and regulatory barriers. AI server growth is expected to play a vital role, supported by innovations like Neptune liquid cooling technology. The 2025 PC TAM is expected to grow in a mid-single-digit to high-single-digit percentage due to the 3-5-year replacement cycle, the sunsetting of Windows 10, and AI PCs driving growth in the premium segment.
• Lenovo had an impressive display of products and solutions at CES 2025, which showcased many innovations, including the world's first 18.1” rollable AI laptop, the world's first gaming device that allows gamers free choice of Windows OS or Steam OS, as well as Moto AI. AI is clearly creating enormous opportunities for continued growth in the market of device IT infrastructure and IT services.