Lenovo’s AI server gross sales exploded in 2026, but income stay flatlinedLenovo’s CSP division bleeds money regardless of surging {hardware} demandExplosive AI demand reveals information heart economics stacked in opposition to OEMsThe Infrastructure Options Group (ISG) at Lenovo has seen record-breaking income development in latest quarters, significantly from AI-related servers, with its most up-to-date monetary quarter seeing it report $4.29 billion in gross sales, a 35.8% improve yr on yr.This follows a number of consecutive quarters of growth pushed largely by rising demand for generative AI and high-performance computing workloads.Nevertheless regardless of the fast and consecutive growth, the group nonetheless reported an working lack of $86 million, underscoring the issue of changing development into profitability, even for enormous companies like Lenovo.
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Revenues surge, income don’t
(Picture credit score: Nextplatform)The graph above reveals a hanging hole between income and revenue in AI infrastructure.ISG’s annual income surges sharply after 2022, climbing towards practically $20 billion by 2026, but ISG’s annual working earnings stays flat, hovering simply above or beneath zero.This distinction reveals how even fast income development within the AI sector doesn’t essentially translate into significant profitability, as excessive prices proceed to weigh closely on margins.Based on The Subsequent Platform, Lenovo generated $18.83 billion in gross sales and $2.77 billion in gross income, a margin of 14.7%.Signal as much as the TechRadar Professional publication to get all the highest information, opinion, options and steerage your enterprise must succeed!Lenovo’s CFO, Winston Cheng, mentioned the margins would have been “north of 17%” if the Cloud Service Supplier (CSP) section have been excluded.“If gross income have been ‘north of 17 %’ – name it 17.2 % so it rounds down – then the non-CSP a part of Lenovo had $16.42 billion in gross sales and round $2.82 billion in gross income,” The Subsequent Platform mentioned.Due to this fact, the CSP division posted a gross lack of $50 million and an working lack of $305 million as soon as prices are allotted proportionally.That interprets to Lenovo shedding $1.00 for each $7.90 it earns from promoting CSP {hardware}, which is essentially tied to AI methods.The Subsequent Platform concluded Lenovo’s ISG offered practically $3 billion in AI methods in Q1 F2026, up 2.8X yr on yr and 18.7% from This autumn, and its AI pipeline is estimated at above $10 billion, seemingly close to $12 billion.But, with risky server demand, U.S.-China tensions, and skinny AI/HPC margins, Lenovo’s laborious work and positive aspects haven’t translated into robust income.Lenovo’s challenges mirror these confronted by different OEMs within the information heart business. Server spending has been inconsistent, and margins on AI {hardware} are skinny, leaving many of the income with part suppliers like TSMC and Nvidia.You may also like
