Quick overview

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Lenovo’s strong growth in AI-related earnings, which countered challenges from rising component prices, put the company on track to close at its highest level on Friday. The top PC manufacturer is the top performer on the Hang Seng China Enterprises Index this year, with its shares rising as much as 17% in Hong Kong.

Lenovo has successfully cultivated a new growth pillar in its data center and storage business to meet the rapidly increasing demand for AI while battling a persistent memory shortage.

This lessened the difficulties in its traditional PC business. Lenovo beat analyst estimates with surprisingly strong numbers for the fiscal year that ended in March, reporting a 38 percent increase in profit and a 20 percent increase in revenue

Lenovo seems to be performing better compared to companies like console manufacturer Nintendo Co., in mitigating the effects of rising memory prices, as evidenced by sales increase of 27% in the March quarter—its fastest rate in five years—while maintaining its gross margin.

“We are at the forefront of AI inferencing and AI democratization thanks to our hybrid AI vision, and I am confident that we will reach our goal of becoming a $100 billion company in two years. Following the earnings, Chief Executive Officer Yang Yuanqing stated in an interview.

According to Yang, the AI transition from training to inference is what is driving the robust growth. He continued, “Inferencing demand will grow even faster and even stronger.” Lenovo is scheduled to begin delivering Nvidia Corp. Rubin-based platforms in the second half of this year, and the business now has a $21 billion AI server pipeline.

Lenovo has joined the global surge in chipmakers, cloud data center operators, and AI model developers perceived as the winners of the new technology boom, with its shares rising more than 60 percent this year. According to Bloomberg Intelligence analyst Steven Tseng, the company’s most recent quarterly results are encouraging, especially the enhanced performance of its AI infrastructure business.