The Operational Excellence Tools Series | #40: Lenovo Reports Record Revenue as AI Business Surges 72% YoY.
Welcome to the unique weekend article for the Loyal Fan subscribers-only edition.
This is the #40 article of The Operational Excellence Tools Series.
Outlines and Key Takeaways
Part 1 – Official Announcement
Part 2 – Background and Meaning
Part 3 – Analysis Through the Lens of Operational Excellence
Part 4 – Lessons for Businesses
Part 5 – Conclusion
PART 1: OFFICIAL INFORMATION
In the third quarter of fiscal year 2025/26, Lenovo Group announced business results that were considered record-breaking in its operating history, marking an important milestone in operational capability, growth management, and large-scale AI utilization at the global level. According to the official Lenovo Press Release, the Group’s consolidated revenue reached USD 22.2 billion for the quarter, representing an 18% year-over-year increase, and becoming the highest quarterly revenue in Lenovo’s history.
These results were achieved against the backdrop of a highly volatile global technology market during the period 2024–2026, characterized by cautious IT spending, pressure from capital costs, intensified competition in hardware, and a strong shift toward AI platforms. Nevertheless, Lenovo maintained double-digit growth, demonstrating its ability to sustain stable operations and flexible adaptation in a complex business environment.
According to Lenovo Press Release and as cited by Reuters, the most important growth driver during the quarter was AI-related revenue, which increased by 72% year-over-year and accounted for approximately 32% of total Group revenue. This indicates that Lenovo has not merely “participated” in the AI trend, but has integrated AI as a core pillar of its business and operating model.
Lenovo’s AI revenue is derived from three main segments: AI-enabled smart devices, enterprise AI infrastructure and data centers, and AI services and management solutions. This multi-pillar approach enables Lenovo to avoid dependence on a single segment while creating synergistic effects across its business ecosystem.
A notable point in the report is that all three major business groups achieved strong growth, including:
First, the Intelligent Devices Group (IDG) – the smart devices segment – continued to hold the number one global market share in personal computers. According to Lenovo Press Release, IDG recorded double-digit growth, driven by the recovery of the PC market and the rising adoption of next-generation AI PCs.
Second, the Infrastructure Solutions Group (ISG) – the infrastructure segment – achieved record revenue, primarily due to strong demand for AI servers, storage systems, and data center solutions. Reuters reported that ISG is one of the most important growth pillars in Lenovo’s AI strategy.
Third, the Services & Solutions Group (SSG) – the services segment – continued to expand its profit margins through IT management contracts, digital operations services, and enterprise AI solutions. According to Lenovo Press Release, SSG plays a critical role in stabilizing cash flow and enhancing customer lifetime value.
The simultaneous growth of all three segments indicates that Lenovo is not dependent on a short-term “boost,” but is operating under a multi-engine growth model, helping to mitigate cyclical risks and strengthen resilience against market volatility.
In terms of profitability, Lenovo reported adjusted net profit of USD 589 million, up 36% year-over-year, with an adjusted profit margin of 2.7%. According to Reuters, these figures reflect the effectiveness of cost optimization programs, product mix improvement, and resource reallocation toward high-value segments.
Notably, during this quarter, Lenovo implemented a deep restructuring of the ISG segment, resulting in a one-time cost of approximately USD 285 million. However, according to Lenovo Press Release, the company expects this restructuring to generate annual savings of more than USD 200 million over the next three years, thereby enhancing long-term profitability.
This demonstrates Lenovo’s willingness to incur short-term costs in order to strengthen its long-term operational foundation, a key characteristic of organizations pursuing Operational Excellence.
Another factor analyzed by Reuters and Bloomberg is Lenovo’s comprehensive AI strategy. Instead of focusing on a limited number of AI products, Lenovo has adopted an “AI for All” strategy, integrating AI across the entire value chain, from product design and manufacturing to logistics, sales, and after-sales services.
In manufacturing, Lenovo has deployed AI to optimize production planning, demand forecasting, and quality control. In logistics, AI is used to optimize inventory and distribution. In sales and services, AI supports customer experience personalization and contract management. This approach ensures that AI is not merely a supporting technology, but a core operational platform.
According to Lenovo Press Release, Group management emphasized that AI growth is not the result of a short-term campaign, but the outcome of long-term investment in data capabilities, IT systems, and technological talent.
Another important point in the report is Lenovo’s ability to control cash flow and working capital. Despite heavy investment in AI and restructuring, Lenovo maintained a stable balance sheet, with safe debt ratios and positive operating cash flow. Reuters noted that this is a key factor enabling Lenovo to sustain investment capacity in an environment of high global interest rates.
In addition, Lenovo continues to expand in emerging markets, particularly in Asia-Pacific, Latin America, and Eastern Europe, in order to reduce dependence on traditional markets. According to Bloomberg, this geographical diversification strategy helps Lenovo spread risk and capture new growth opportunities.
Overall, the results for the third quarter of fiscal year 2025/26 indicate that Lenovo is operating under a growth model built on three pillars: AI as the growth engine, business diversification, and operational system optimization. This is not the result of short-term luck, but the outcome of years of strategic restructuring, technological investment, and enhanced management capability.
According to Reuters, Lenovo represents a typical example of how a traditional technology conglomerate can transform into an AI-driven leader by effectively combining strategy, technology, and operational discipline. Lenovo Press Release also emphasized that the Group will continue to prioritize investment in AI, high-value services, and digital operational capabilities in the coming years.
From a corporate operations perspective, these results show that Lenovo has not only achieved impressive financial performance, but has also demonstrated the ability to scale with control, maintain profitability during growth, and convert technological innovation into real competitive capability. This forms a critical foundation for deeper analysis of Operational Excellence in the subsequent sections.