Lenovo’s profit has exceeded market expectations for the third consecutive quarter, with the role of PCs in revenue noticeably decreasing.

Lenovo, China’s leading PC manufacturer, reported higher-than-anticipated profit figures for the third consecutive quarter. The firm’s net income for the past quarter totalled $248 million, topping the projected $158.4 million.

The company’s revenues grew 9.5% to $13.8 billion in the previous quarter, exceeding investor predictions of an average of $13.1 billion. Net income rose 118% year-on-year, with non-PC sectors accounting for a record 45% of Lenovo’s total revenue.

In its quarterly report, Lenovo revealed that the PC market has recovered and registered growth. Lenovo’s profitability among PC manufacturers is exceptional, leading in sales in four out of five macro-regions and capturing 22.9% of the global PC market. Income from smart devices, which include smartphones and tablets, surged 7% YoY to $10.5 billion. This positive trend marks the second consecutive quarter of revenue growth. Smartphone deliveries witnessed a 23% YoY increase and their revenues rose by 14%. Tablet shipments have grown 13% in comparison with last year. According to IDC, Lenovo’s PC shipments escalated by nearly 8% to 13.7 million units in the last quarter.

Lenovo’s solutions and services sector has seen revenue rises exceeding 10% over the past 12 quarters. It peaked at $1.8 billion last quarter, realizing an operating profit rate of 21.4%. In the fiscal year 2024, ending recently as per Lenovo’s calendar, the revenue in this division rose to a record-breaking $7.74 billion, with 54% of the revenue not directly tied to hardware sales.

In the infrastructure segment, Lenovo’s revenue for the past quarter increased by 15% to a record $2.53 billion even though the operating losses amounted to $97 million. Company representatives attributed the operational trends to the slow transition to DDR5, increased R&D expenditures, and the ongoing shortage of computation accelerators.

Lenovo anticipates that the PC market will rebound beyond pre-pandemic levels, driven by consumer demand for CPUs that enhance AI systems using local hardware resources. The management company anticipates CPUs with these capabilities to evolve from high-end to mainstream within the next three years.