Syed Imran Haider 
Last week, the Lenovo Group reported a revenue increase of 9% for the first quarter. The revenue rose to $13.8 billion.
The largest maker of personal computers (PCs) in the world has finally managed to exit the demand slump. This had occurred due to the COVID-19 pandemic.
Revenue growth
Analysts had estimated revenue of about $13 billion in the January to March quarter. The actual numbers managed to beat expectations.
It is also a second consecutive quarter of revenue growth for the Chinese firm, after it recorded revenue declines for five straight quarters due to the post COVID-19 slowdown.
Research firm IDC stated last month that the first quarter of this year saw the global PC market return to growth. It had been suffering from decline in the last two years.
There was a 1.5% growth in PC shipments over year to reach 59.8 million in the quarter. IDC disclosed that with a market share of 23%, Lenovo was holding onto the lead.
However, the overall revenue for Lenovo for the year ending on March 31st saw a decline of 8%. It reached $56.9 billion, which was slightly higher than expectations of analysts of $56.19 billion.
The numbers
Meanwhile, the company saw its net profit rise 118% for the January to March quarter. It reached $248 million, which was significantly higher than analyst expectations of $162 million.
Not only is Lenovo continuing to expand its non-PC business, but is also exploring opportunities in artificial intelligence (AI) actively.
Its non-PC business comprises of servers, smartphones and information technology services. There was an 8.5% increase in the revenue for the service business unit in this quarter, as it reached $1.8 billion.
AI PC Boom
Last week, the company’s shares also reached a 9-year peak after it launched two new AI PCs. These computers have been created for running AI applications effectively.
According to analysts at Morgan Stanley, the AI boom in Asia is likely to benefit Lenovo significantly. This year, AI PCs make up for less than 5% of the overall market.
However, the analysts said that by 2028, about 64% of all new PCs will actually be AI PCs. Therefore, they will be able to generate 53% more revenue for Lenovo.
This would be the highest amongst all PC manufacturers, as compared to the existing 2%. Yuanqing Yang, the CEO of Lenovo, said that the PC replacement cycle would be driven by AI PCs.
The company started shipping its AI PCs in May. The CEO asserted that most people would now buy AI PCs.
He also added that they expect 10% of their shipments by the end of the year to be AI PCs. He added that the figure could increase to 50% or 60% in two years.
Outside of China, Lenovo is working with Microsoft for AI PCs. Most of the AI features from Microsoft will not be available in China.
This is because the Chinese government has restricted foreign AI services heavily. But, Yang said that this gives Chinese companies like Lenovo to become AI service providers in the country.
