Business

Lenovo Ends Five Quarter Losing Streak with $15.7 Billion Revenue

Lenovo, the world’s largest computer producer by volume, reported a revenue of $15.7 billion for the quarter ending Dec. 31, 2023, marking a 3% increase from the previous year and ending a five-quarter losing streak.

The company’s personal computers contribute about 80% of its revenue, and the surprise growth defied analysts’ expectations of flat growth. However, despite the positive revenue news, Lenovo’s shares fell by as much as 8.5% in Hong Kong, likely influenced by concerns over a 23% drop in quarterly net income, reaching $337 million.

To drive demand and navigate challenges in the PC market, Lenovo is turning to artificial intelligence (AI). The company plans to ship its first AI personal computers in the first half of the year. These devices will feature dedicated processors to handle generative AI tasks locally on the device, a departure from cloud-based processing. Lenovo aims to introduce “a personal intelligent agent” and a “compressed local large language model” with these AI PCs, offering a unique selling proposition.

Luca Rossi, president of Lenovo‚Äôs PC division, revealed the company’s AI PC plans, emphasizing the potential for an “inflection point for the PC industry.” CFO Wai Ming Wong suggested that AI PCs could drive a new product cycle with premium pricing, indicating optimism about the impact of these devices on the market.

While AI PCs are positioned as a transformative step for Lenovo, analysts predict that the peak adoption of these devices might occur in the second half of 2024 through 2025. Lenovo’s move aligns with the broader trend of tech companies integrating AI into their products and services.

A recent report from IDC forecasts that over 167 million AI PCs will be shipped in 2027, with a focus on commercial buyers but potential interest from consumers in gaming and digital creation applications.

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