Produced by Leida Finance Text by Ding Yu Edited by Meng Shuai

For the fiscal year ended March 31, 2026, Lenovo Group reported its ‘best-ever financial results’.

In FY2026, Lenovo Group’s revenue soared to a record $83.1 billion, while profit attributable to shareholders reached $1.9 billion, up 38% year-on-year.

However, behind these stellar numbers, Lenovo’s gross profit margin faced significant pressure. In FY2026, it stood at 15.4%, down 0.7 percentage points year-on-year, hitting a seven-year low.

Indeed, while the current AI boom poses challenges, it also brings opportunities. Amid rising storage costs, Lenovo’s Smart Devices Group accelerated its shift toward premium products, maintaining an operating margin of 7.2% in FY2026.

Meanwhile, Lenovo’s Infrastructure Solutions Group turned profitable, though it remains in a low-margin growth phase, with a full-year operating margin of just 0.4%—far below the 7.2% and 22.3% margins of the Smart Devices Group and Solutions and Services Group, respectively.

Notably, in the 2026 Hurun Global Rich List released in March, Lenovo Chairman and CEO Yang Yuanqing reappeared on the list with a fortune of 7.5 billion yuan.

At the earnings briefing, Yang Yuanqing stated that AI infrastructure is experiencing explosive growth, with a rapid transition from training to inference. Nevertheless, he believes demand for AI training infrastructure will continue to rise, and reliance solely on major cloud service providers will no longer suffice.

Revenue and profit soar, but gross profit margin hits seven-year low

According to Tianyancha data, Lenovo Group went public on the Hong Kong Stock Exchange in 1994. On May 22, Lenovo released its FY2026 (April 1, 2025–March 31, 2026) financial results.

During the reporting period, Lenovo’s revenue surpassed the $80 billion milestone, climbing 20% year-on-year to $83.1 billion—a record high.

Profitability approached the historical peak seen in FY2022. In FY2026, adjusted profit attributable to shareholders reached $2 billion, up 42% year-on-year—double the revenue growth rate. Reported profit attributable to shareholders stood at $1.9 billion, up 38% year-on-year.

Notably, Lenovo’s AI business gained further momentum in FY2026, with AI-related revenue surging 105% year-on-year to account for 33% of total revenue.

Both AI devices and AI services achieved triple-digit year-on-year revenue growth, while AI server revenue also saw strong double-digit growth.

However, the company’s full-year gross profit margin declined by 0.7 percentage points to 15.4%, the lowest level since 2020.

Lenovo attributed the margin decline primarily to shifts in product mix and lower margins in the Infrastructure Solutions Group.

Focusing on Q4 FY2026 (Q1 2026), Lenovo’s revenue reached $21.6 billion, up 27% year-on-year—the fastest quarterly growth in five years. Adjusted profit attributable to shareholders rose to $559 million, up 101% year-on-year.

Driven by strong demand for AI-related devices, infrastructure, and services, Lenovo’s AI-related revenue surged 84% year-on-year in the quarter, accounting for 38% of total revenue.

iFinD data shows that as of the end of FY2026, Lenovo’s debt-to-asset ratio stood at 85.2%, up 0.3 percentage points from the end of the previous fiscal year. Over the longer term, Lenovo’s debt-to-asset ratio has consistently remained above 84%.

Infrastructure Solutions Group turns profitable as Lenovo doubles down on AI

Currently, Lenovo’s core businesses consist of three segments: the Smart Devices Group, Infrastructure Solutions Group, and Solutions and Services Group.

In FY2026, these three segments generated revenues of $58.9 billion, $19.2 billion, and $10 billion, up 17%, 32%, and 19% year-on-year, respectively, accounting for 67%, 22%, and 11% of total revenue before eliminations. Operating margins stood at 7.2%, 0.4%, and 22.3%, respectively.

Lenovo stated that all three business groups achieved strong double-digit year-on-year revenue growth, driven by AI-powered expansion and a comprehensive portfolio of products and services.

Among these, the Infrastructure Solutions Group stood out, leading in revenue growth and turning profitable in FY2026.

Lenovo said that robust AI-driven demand in both cloud and enterprise infrastructure drove double-digit year-on-year revenue growth for AI servers, with the AI server project backlog expanding to $21 billion by year-end.

According to Jiemian News, in Q3 FY2026, Lenovo invested $285 million in one-time restructuring costs to streamline traditional computing product lines and shift R&D resources toward AI inference. Yang Yuanqing at the time expected the business to turn profitable in the following quarter.

In Q4 FY2026, the Infrastructure Solutions Group achieved record quarterly revenue of $5.6 billion, up 37% year-on-year, and delivered its highest-ever quarterly operating profit of $202 million.

Lenovo believes this reflects strong customer adoption of its optimized AI infrastructure portfolio for cloud and enterprise infrastructure, as clients increasingly prioritize performance, energy efficiency, supply predictability, and deployment readiness. It also marks a major turning point for the Infrastructure Solutions Group.

Lenovo emphasized that its strategic transformation remains on track, aiming to establish the infrastructure business as a stronger engine for growth and profitability.

However, the Infrastructure Solutions Group’s operating margin remains relatively low at just 0.4%.

Liu Jun, Executive Vice President and President of Lenovo China, said that China’s infrastructure solutions business grew nearly 20% year-on-year. Enterprise market revenue surged 44% year-on-year, while in cloud infrastructure, Lenovo became a core supplier to nearly all major cloud providers, including ByteDance, Alibaba, Tencent, and Baidu.

According to Global Times, the infrastructure business has innovated its business model, launching AI all-in-one machines and the Token Factory AI training platform through Wanquan Zhisuan.

It was revealed that the Solutions and Services Group will use Qi Tian AI as its engine in the new fiscal year to build the Token Hub.

Additionally, the group will continue to drive innovation for AI scenarios across industries, including enterprise-grade Claw solutions and full-stack AIDC services.

Regarding future development, Liu Jun said Lenovo is shifting from providing modular servers and storage to delivering holistic computing power and even entire data center solutions.

Consumer hardware goes premium, smartphone business stages overseas comeback

Turning to Lenovo’s ‘cornerstone business’—consumer smart hardware, primarily represented in the financials by the Smart Devices Group, which includes PCs and smartphones.

In FY2026, Smart Devices Group revenue rose 17% year-on-year to $58.9 billion, with an operating margin of 7.2%.

Since last year, sustained AI computing demand has severely strained consumer-grade storage capacity, causing storage costs to soar.

To maintain profitability, Lenovo pivoted toward the premium market. In the PC business, Lenovo achieved its largest market share lead in 15 years in Q4 FY2026.

PC shipments in the quarter outpaced the market by 5.6 percentage points, with global market share rising 1.3 percentage points year-on-year to a record 24.4%. Premium PCs accounted for 50% of total shipments.

As of March 31, 2026, Lenovo’s cumulative PC sales reached 1.1 billion units, a new all-time high and milestone.

In smartphones, Lenovo achieved its highest full-year revenue since acquiring Motorola, driven by demand for the Razr, Edge, and Signature series. Premium models accounted for a record 19% of total shipments.

Lenovo said Motorola ranked first among foldable smartphone brands in FY2026, holding leading market shares in North America and Latin America.

In Q4 FY2026, Motorola smartphone shipments hit a record high since acquisition, with double-digit year-on-year revenue growth and operating margin expansion.

Notably, the business outperformed the broader market for 11 consecutive quarters outside China, with shipments up 6% while the overall market declined 3%.

According to IDC data, Lenovo Motorola performed strongly overseas last Q4, generating $4.2 billion in revenue, up 10.7% year-on-year. With a 3.2% market share, it ranked fourth alongside OPPO, surpassing Google, Vivo, and others.

Globally (including China), Lenovo Motorola’s revenue rose 11% year-on-year to $4.3 billion, holding an 8th-place market share of 2.5% and significantly outpacing the global market’s 10.2% average growth.

In terms of shipments, Lenovo Motorola shipped 16.4 million units overseas last Q4, up 8.6% year-on-year, with market share rising to 6.3% and climbing two spots to 5th place. Global shipments reached 16.76 million units, up 9.4% year-on-year, with a stable 5% market share and 8th-place ranking.

Industry analysts attribute Lenovo Motorola’s strong growth to its clear market strategy. On one hand, it leverages Lenovo’s global supply chain and operator channels to penetrate mid-to-low-end markets overseas, with the Moto G series driving volume.

On the other hand, its foldable products, particularly the moto razr series, have captured significant market share in the global compact foldable segment, boosting brand premiumization.

Leida Finance will continue to monitor Lenovo Group’s future developments.