In a recent statement, Lenovo's CEO expressed optimism following the tariff pause between the U.S. and China, emphasizing positive growth in China's AI infrastructure amidst ongoing tech tensions between the two countries. The company's fiscal first-quarter results have shown remarkable progress, with significant revenue growth and an increase in net profit.
Lenovo's overall revenue for the three months ending June 30 saw a 22% increase year-on-year, reaching $18.8 billion, surpassing analysts' expectations. This growth was primarily driven by strong AI demand across all three major business segments, each experiencing double-digit growth in the first quarter. Notably, AI PC shipments accounted for more than 30% of all Lenovo PC shipments during this period.
Despite facing a 30% tariff on Chinese exports to the U.S., Lenovo remains confident in its business resilience due to its global manufacturing footprint. The company's CEO revealed that the U.S. market contributes less than 20% to Lenovo's total revenue, minimizing the impact of tariffs on its operations. Additionally, Lenovo's net profit attributable to shareholders more than doubled year-on-year to $505 million, exceeding market expectations.
With a focus on diversifying its supply-chain options, particularly in the semiconductor sector, Lenovo has invested significantly to develop local component products to meet customer demand. This strategic approach aligns with China's recent advice for major internet firms to consider domestic alternatives when purchasing Nvidia H20 chips, amidst the ongoing tech tensions.
Lenovo's shares experienced a slight decline of more than 3% in early trading following the announcement. However, the stock has shown resilience over the past three months, climbing 15% and outpacing gains in the benchmark Hang Seng Index. This positive trajectory reflects market confidence in Lenovo's ability to navigate challenges in the current geopolitical landscape.
Lenovo's strong performance in the face of US-China tech tensions and trade uncertainties demonstrates the company's resilience and strategic vision. With a focus on innovation and diversification, Lenovo is well-positioned to capitalize on the evolving dynamics of the global technology market.
