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Lenovo Delivers Record 2Q 25/26 Results as Hybrid AI Strategy Takes Hold
Strong AI-related growth across devices, infrastructure and services positions Lenovo for continued momentum while cost structure and margin trends remain areas to watch.
22/11/2025
Key Highlights:
Lenovo reported a record second quarter with revenue of 20.5 billion dollars, up 15 percent year over year, and adjusted net income of 512 million dollars, up 25 percent.
AI-related revenue increased to 30 percent of total revenue, with triple-digit growth in AI PCs, AI smartphones and AI services and high double-digit growth in AI servers.
Intelligent Devices Group strengthened its PC leadership with a 25.6 percent global market share and 33 percent AI PC penetration. Motorola delivered record smartphone volumes.
Infrastructure Solutions Group grew revenue 24 percent to 4.1 billion dollars, driven by strong cloud service provider performance and 154 percent growth in liquid cooling.
Solutions and Services Group delivered its eighteenth consecutive quarter of growth with revenue of 2.6 billion dollars and operating margin above 22 percent.
The News
Lenovo reported record second-quarter results for fiscal year 2025/26, posting 20.5 billion dollars in revenue and 25 percent adjusted net income growth. The company delivered double digit revenue increases across all major business groups and geographies, and AI-related revenue increased to 30 percent of the total. Reported net income declined 5 percent due to ongoing non-cash valuation and financing adjustments that Lenovo continues to disclose separately.
The company also highlighted continued progress across its Hybrid AI strategy. Lenovo previewed its upcoming Personal AI super agent, highlighted significant scaling across AI PCs, AI infrastructure, and AI-driven services, and reported multiple corporate and ESG milestones. For more information, read the full press release here.
Analyst Take
In our view, Lenovo’s second-quarter results mark a clear step forward in the company’s Hybrid AI strategy and build on the ‘pocket to cloud’ narrative. The momentum across AI PCs, AI smartphones, AI services, and AI infrastructure reflects a real shift in customer adoption patterns rather than a one-time uplift. Lenovo is translating device scale, supply chain reach, and engineering depth into a broader platform position that spans Personal AI and Enterprise AI.
What stands out is the breadth of AI-driven contribution. AI PCs accounted for one-third of PC shipments. Motorola delivered record smartphone volumes. AI infrastructure revenue continued to scale. Solutions and Services Group extended its multi-year track record of growth while pushing deeper into managed services and industry solutions. This type of cross-portfolio alignment is rare in large-scale IT vendors and supports Lenovo’s argument that Hybrid AI is an organization-wide transformation.
There are still areas to monitor. Operating profit declined 1 percent year over year. Operating expenses increased 17 percent. Gross margin declined slightly. The gap between adjusted and reported net income remains significant. None of these detract from the structural progress Lenovo is making, but margin expansion and operating leverage must become clearer contributors through 2026.
Customers are beginning to make architectural decisions about AI in devices, at the edge and in the data center. We believe Lenovo is positioning itself as a partner across all three. The company’s Global and Local operating model continues to provide resilience across supply chains and customer segments. We will be watching how Lenovo converts its expanding AI revenue mix into sustained profitability, cash generation, and differentiated market leadership.
What Was Announced
Lenovo announced second-quarter revenue of 20.5 billion dollars, up 15 percent year over year. Adjusted net income grew 25 percent to 512 million dollars, and adjusted net income margin expanded to 2.5 percent. Reported net income declined 5 percent due to non-cash fair value changes on warrants, notional interest on convertible bonds and other adjustments that do not reflect core operating performance. Significantly, all major business groups and geographies delivered double-digit revenue growth.
AI-related revenue reached 30 percent of the company's total, an increase of 13 points from the same period last year. AI servers delivered high double-digit revenue growth. This is a key metric that we look for every quarter. AI PCs, AI smartphones, and AI services delivered triple-digit growth. AI device revenue mix increased to 36 percent. Lenovo stated that demand for Personal AI and Enterprise AI is strengthening and that the current upgrade cycle spans devices, infrastructure, and managed services.
Intelligent Devices Group reported 15.1 billion dollars in revenue, up nearly 12 percent year over year. Lenovo expanded its number one global PC market share position to 25.6 percent and reported 33 percent AI PC penetration, supported by strong demand for Windows AI PCs, where Lenovo holds a 31.1 percent global share. Motorola delivered record smartphone volumes. Lenovo previewed its Personal AI strategy centered on the “One Personal AI, Multiple Devices” model and confirmed that its Personal AI super agent will launch globally at Tech World in January 2026.
Infrastructure Solutions Group posted revenue of 4.1 billion dollars, a 24 percent year-over-year increase. The cloud service provider segment delivered record second-quarter revenue. AI infrastructure revenue grew at a high double-digit rate with a strong pipeline. Revenue from liquid cooling solutions increased 154 percent year over year. Lenovo stated that the company’s optimized enterprise and SMB business models support a return to profitable growth.
Solutions and Services Group delivered revenue of 2.6 billion dollars, up 18 percent year over year, and operating margin expanded to more than 22 percent. This marks the eighteenth consecutive quarter of year-over-year growth for SSG. Managed services and project-based solutions accounted for nearly 60 percent of SSG revenue, and support services delivered double-digit growth. The Lenovo Hybrid AI Advantage, which includes the AI factory, AI services, and a library of repeatable industry solutions, continued to gain traction.
Lenovo also used the earnings announcement to highlight several corporate achievements. The company added its Monterrey, Mexico factory to the World Economic Forum Global Lighthouse Network. ESG scores improved across CDP and S&P Global, and Lenovo maintained a AAA MSCI ESG rating for the fourth consecutive year. Lenovo retained its number one position in the Gartner Asia Pacific Supply Chain rankings. The company expanded partnerships with the United Nations Industrial Development Organization and joined the Coalition for Sustainable AI. The Board declared an interim dividend of 8.50 Hong Kong cents per share.
Looking Ahead
In our opinion, 2026 will be a pivotal year for Lenovo. Not only with headline sponsorships with the FIFA World Cup and F1, which will give a hero glow to the brand, but more foundationally around how the company is architecting an end-to-end AI stack, rather than chasing temporary refresh cycles. The foundations of a broader Hybrid AI strategy are becoming visible across the business, and directional alignments are taking shape. Lenovo continues to push intelligence toward devices through NPUs in PCs and smartphones, simplify enterprise adoption through validated “in a box” infrastructure for organizations that want predictable deployment, and bind these layers together with lifecycle services, managed operations, and as-a-Service delivery.
The shift from helpful assistants to true agentic workflows is underway, and Lenovo’s view is that AI will be embedded into the fabric of devices, applications, data, and support services. Customers are not just asking how to deploy AI, but how to make it reliable, governed, and cost-effective. Lenovo is orienting its roadmap toward that practical reality.
We believe a major element of the coming year will be the expansion of Lenovo’s storage and data foundation. The pending close of the Infinidat acquisition will introduce high-end, cyber-resilient enterprise storage into a portfolio that has historically been strongest in the entry and midrange segments. How Lenovo executes the integration could redefine the competitive landscape in storage for years to come.
Combined with Lenovo’s server platforms, liquid cooling systems, and data management offerings, this positions the company to define a more comprehensive AI-ready data layer. Enterprises increasingly want primary storage, backup, GPU infrastructure, and edge platforms that operate as a coherent system, and Lenovo appears intent on meeting that expectation. In our view, success will depend on how quickly Lenovo can integrate these assets, reduce complexity for customers, and demonstrate that its storage strategy is not just broader but meaningfully differentiated.
Lenovo’s Personal AI strategy adds another dimension. The company’s vision for a multi-device AI experience, anchored by the forthcoming Personal AI super agent, aims to move AI out of single-application silos and into a more coordinated model across PCs, smartphones, and wearables. This will test whether organizations are ready to standardize on unified device-level AI experiences and whether Lenovo can extend its PC leadership into a new class of agent-driven workflows. The opportunity is significant, particularly for enterprises seeking measurable gains in productivity, sustainability, and device lifecycle management at scale.
On the enterprise side, Lenovo sees that real growth lies in democratizing AI infrastructure for organizations that do not want to piece together training and inference clusters on their own. Building blocks such as validated AI stacks, integrated networking, secure Storage-as-a-Service consumption models, and vertical solutions are all designed to reduce friction. In services, the focus is shifting toward reusable frameworks, repeatable discovery engagements, and AI solutions that can be deployed with consistent governance. The challenge ahead is to show that these capabilities can drive recurring revenue, higher services attach, and improved operating leverage.
Financial execution remains central to this next phase. Operating expenses grew faster than revenue this quarter, and operating profit declined slightly. The gap between adjusted and reported net income will continue to draw attention as Lenovo scales more capital-intensive businesses, integrates new acquisitions, and expands its AI infrastructure portfolio. Free cash flow conversion, Infrastructure Solutions Group margin expansion, higher contribution from managed services, and sustained leadership in AI devices will be the strongest indicators of whether Lenovo can translate its Hybrid AI strategy into long-term value creation. By balancing innovation with cost discipline and continuing to align its device, infrastructure, and services portfolios around a unified AI experience, we believe Lenovo will be well-positioned to shape the next chapter of enterprise and personal computing.
Ron Westfall | VP and Practice Leader for Infrastructure and Networking
Ron Westfall is a prominent analyst figure in technology and business transformation. Recognized as a Top 20 Analyst by AR Insights and a Tech Target contributor, his insights are featured in major media such as CNBC, Schwab Network, and NMG Media.
His expertise covers transformative fields such as Hybrid Cloud, AI Networking, Security Infrastructure, Edge Cloud Computing, Wireline/Wireless Connectivity, and 5G-IoT. Ron bridges the gap between C-suite strategic goals and the practical needs of end users and partners, driving technology ROI for leading organizations.
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Stephanie Walter | Practice Leader - AI Stack
Stephanie Walter is a results-driven technology executive and analyst in residence with over 20 years leading innovation in Cloud, SaaS, Middleware, Data, and AI. She has guided product life cycles from concept to go-to-market in both senior roles at IBM and fractional executive capacities, blending engineering expertise with business strategy and market insights. From software engineering and architecture to executive product management, Stephanie has driven large-scale transformations, developed technical talent, and solved complex challenges across startup, growth-stage, and enterprise environments.
Don Gentile | Analyst-in-Residence -- Storage & Data Resiliency
Don Gentile brings three decades of experience turning complex enterprise technologies into clear, differentiated narratives that drive competitive relevance and market leadership. He has helped shape iconic infrastructure platforms including IBM z16 and z17 mainframes, HPE ProLiant servers, and HPE GreenLake — guiding strategies that connect technology innovation with customer needs and fast-moving market dynamics.
His current focus spans flash storage, storage area networking, hyperconverged infrastructure (HCI), software-defined storage (SDS), hybrid cloud storage, Ceph/open source, cyber resiliency, and emerging models for integrating AI workloads across storage and compute. By applying deep knowledge of infrastructure technologies with proven skills in positioning, content strategy, and thought leadership, Don helps vendors sharpen their story, differentiate their offerings, and achieve stronger competitive standing across business, media, and technical audiences.
Steven Dickens | CEO HyperFRAME Research
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the CEO and Principal Analyst at HyperFRAME Research.
Ranked consistently among the Top 10 Analysts by AR Insights and a contributor to Forbes, Steven's expert perspectives are sought after by tier one media outlets such as The Wall Street Journal and CNBC, and he is a regular on TV networks including the Schwab Network and Bloomberg.