Lenovo’s strong financial performance in fiscal year 2024/25 underscores its resilience and reflects a strategic shift toward making artificial intelligence a central driver of its future growth.
With annual revenue rising 21 percent to $69.1 billion — the second-highest in its history — and net income up 36 percent to $1.4 billion, Lenovo has signaled to the market that it is more than just a PC manufacturer: it is rapidly transforming into an AI-powered technology solutions powerhouse.
Intelligent Devices Group (IDG): Cementing Leadership in AI PCs and Mobility
Lenovo’s IDG saw a 13 percent revenue rise to $50.5 billion, with an operating margin exceeding 7 percent, among the highest in the group’s history. At the core of this performance is the strategic pivot toward AI PCs, where Lenovo has outpaced its volume targets and now leads the Windows AI PC category globally. This aggressive push signals a shift from conventional hardware sales to AI-enhanced productivity experiences, effectively creating a new category that blends edge computing, AI inference, and smart user interfaces.
The company’s innovation pipeline is robust, with launches like the ThinkBook Plus Gen 6 (rollable display), Legion Go S (handheld gaming), and new foldables such as the AI-powered motorola razr. These offerings not only target consumer excitement but also serve as testbeds for AI-driven form factors that could redefine mobile computing.
The smartphone segment, riding a 27 percent revenue surge, and tablets (double-digit growth) demonstrate how Lenovo’s AI focus is permeating its mobile portfolio. Enhanced software experiences powered by Moto AI add to its differentiation in an otherwise commoditized market.
Looking forward, Lenovo’s vision of building an AI-driven, cross-device ecosystem and deploying AI super agents hints at a long-term play to bind its diverse hardware under a cohesive, intelligent experience — potentially reducing platform dependency and deepening user engagement.
Infrastructure Solutions Group (ISG): AI Infrastructure as a Core Growth Engine
ISG’s 63 percent revenue surge to $14.5 billion underlines Lenovo’s success in capitalizing on the booming demand for AI infrastructure. Its AI server business achieved hypergrowth, supported by high-efficiency solutions like Neptune liquid cooling, which responds directly to the thermal challenges of modern AI workloads.
The Group’s Cloud Service Provider (CSP) segment reached self-sustaining profitability, while the Enterprise and SMB verticals posted record revenues. This diversification is crucial as it reduces overreliance on hyperscalers and spreads risk across geographies and customer segments.
Going forward, ISG aims to simplify its portfolio, enhance go-to-market strategy, and strengthen operational resilience, all while maintaining focus on AI-specific hardware demand. The emphasis on balanced, sustainable profitability marks a strategic maturation from rapid expansion to optimized scale.
Solutions and Services Group (SSG): High-Margin Growth Powered by AI Services
Lenovo’s SSG reported a 13 percent revenue increase to $8.5 billion, with an impressive 21.1 percent operating margin — a clear indication of the value-add nature of services in its business mix. Nearly 60 percent of this revenue now comes from solutions and ‘as-a-service’ offerings, with AI solutions playing a pivotal role.
The success of SSG reflects the growing enterprise demand for AI-enabled transformation services, ranging from deployment to lifecycle management and AI-powered analytics. Lenovo’s Hybrid AI Advantage framework is designed to tap into this trend, creating differentiated enterprise value beyond hardware sales.
Looking ahead, Lenovo plans to expand its AI services portfolio, especially targeting enterprise solutions where hybrid cloud and edge AI use cases are accelerating. The SSG’s ability to monetize AI through services complements hardware-led growth from IDG and ISG, creating a more resilient business model.
Strategic Shift Toward Hybrid AI
At the core of Lenovo’s success is its clear and aggressive focus on hybrid AI. The company’s strategy encompasses both personal and enterprise-level AI applications, which it refers to as the “Hybrid AI Advantage.” This includes:
AI PCs: Lenovo has emerged as the global leader in the Windows AI PC category, a nascent but fast-growing segment.
AI-powered Mobility: It launched the first foldable phone integrated with Moto AI, signaling its intent to redefine the mobile experience with on-device intelligence.
AI Infrastructure: Lenovo’s AI server business experienced hypergrowth, catering to enterprises looking to modernize data infrastructure.
AI Super Agents: Most recently, Lenovo unveiled its first personal and enterprise AI agents, representing a significant leap toward ambient AI experiences in both consumer and business settings.
These initiatives align with global tech trends, where edge computing, on-device intelligence, and AI-powered services are expected to drive the next wave of innovation.
Diversification and Resilience
Lenovo’s strategic transformation is also evident in its shifting revenue mix. Non-PC business now accounts for 47 percent of total revenue, up nearly five percentage points year-over-year. This diversification across infrastructure solutions, services, and smart devices has not only cushioned Lenovo from fluctuations in PC demand but also positioned it as a broad-based technology leader.
Geographically, Lenovo has seen double-digit growth across all markets, underpinned by a globally integrated operational model. With over 30 manufacturing sites in 11 countries and an ODM+ manufacturing strategy, the company ensures flexibility and localized delivery—an essential capability in today’s unpredictable geopolitical and supply chain landscape.
Investment in R&D and Innovation
Lenovo increased R&D spending by 13 percent to $2.3 billion, reinforcing its commitment to long-term innovation. This investment supports both the development of new AI products and the strengthening of internal capabilities, such as demand forecasting and supply chain optimization through AI. The emphasis on R&D underscores Lenovo’s ambition to stay ahead of the curve in a market where AI-first strategies are becoming the norm.
Looking Ahead
CEO Yuanqing Yang’s assertion that Lenovo’s hybrid AI focus is laying the groundwork for future leadership appears credible given the company’s performance metrics and technology rollouts. The Q4 FY24/25 numbers further validate this direction, with 23 percent year-over-year revenue growth to $17 billion and a 25 percent jump in net income to $278 million.
Lenovo’s results and strategic posture indicate a company in the midst of a successful reinvention. By embedding AI across its product lines and operations, diversifying beyond PCs, and investing heavily in innovation, Lenovo is well-positioned to be a dominant force in the AI-powered tech economy. Its hybrid AI strategy, global footprint, and resilient supply chain give it a competitive edge that few legacy hardware companies have been able to match. As the AI era matures, Lenovo looks set not just to participate — but to lead.
Baburajan Kizhakedath
