(Nov 20): Lenovo Group Ltd posted better-than-expected quarterly revenue, thanks to its increased market share in global personal computers (PCs) and robust demand for artificial intelligence (AI) servers.
Revenue in the September quarter rose 15% to US$20.5 billion ($26.8 billion), above analysts’ average estimate of US$20.1 billion. Net profit slid 5%. Lenovo grew PC shipments 17.3% in the July to September period and expanded its market share, outpacing global rivals including HP Inc and Dell Technologies Inc, according to consultancy IDC.
But a surge in memory chip prices, which is hitting a wide range of companies, is also likely to erode the margins of PC makers. Lenovo and Dell shares weakened this week following a downgrade by Morgan Stanley analysts, who cited higher costs of memory chips — a key component for smartphones, PCs and servers.
The Chinese company is also grappling with a slowing economy and sluggish consumption at home. Still, demand for AI servers is expected to keep driving growth for Lenovo.
“Still-weak traditional enterprise IT spending may also remain a slight headwind to desktop PC and data centre hardware sales, but rising sales to cloud providers could help blunt headwinds from other customers,” Bloomberg Intelligence analysts Steven Tseng and Sean Chen wrote in a report ahead of earnings.
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