Lenovo Q4 beat fueled by new AI PC offerings, exec. explains

Lenovo (0992.HK, LNVGY) has reported its fourth-quarter earnings, surpassing estimates on both the revenue and earnings front. Lenovo North America President Ryan McCurdy joins Market Domination to discuss the computer company's growth trajectory and outlook.

Despite facing some headwinds, McCurdy notes that Lenovo has experienced growth over the past four quarters. He highlights that the company's North American segment has seen an 11% increase in its business, signaling that they have "successfully navigated this industry downturn."

One of the key drivers behind Lenovo's revenue growth, according to McCurdy, has been the introduction of its new AI PCs, developed in partnership with Microsoft (MSFT). He believes "the industry is ready" for such innovative product offerings, capitalizing on the ongoing refresh within the company and the booming demand for artificial intelligence solutions.

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This post was written by Angel Smith

Video transcript

The world's leading PC maker beat on earnings today.

Lenovo, more than doubled its net income in Q four and marked the third straight quarter of better than expected profit companies.

One of the first to bring A I laptops to market with the hope that devices will become new growth drivers.

Joining us now is Ryan mccurdy Lenovo, North America, President Ryan, it is good to see you still looking through the report 9% pop in Q four revenue.

That was a beat profit beat too.

Maybe.

Let, let's just start there.

Ryan, what, what drove the quarter here?

Hey, thanks for having me.

It's great to be here.

Yeah, very optimistic.

Uh The report that we came out with today, uh as you said, we remain the world's largest PC manufacturer really leading this PC market resurgence and we continue to diversify our portfolio beyond PC across data center and our services business.

You know, I'm responsible for North America and that business uh was up 11% and really more than the quarterly results which are great.

Um I'm, I'm encouraged by the trend.

This is our second consecutive quarter of revenue growth and profit growth across all of our businesses.

So we're really focused on our performance in North America against our competitors.

And uh after 10 straight consecutive quarters of decline, I DC reported that the part the PC market showed its first quarter of growth and we reached the highest PC market share we've had in our history at 18.2%.

So really, uh and it's the fourth consecutive quarter that we've outpaced the market.

So for us that illustrates that we've successfully navigated this, this industry downturn and we've moved past that and we're really ready to capture this enormous opportunity of hybrid A I So Ryan, uh what is driving the rebound that you're seeing?

Is it enterprise, is it retail, is it uh I believe, I don't know if your A I stuff was all in place last quarter and the numbers were reflected there, you know, what, what are some of the drivers here?

Yeah, I mean, the A I PC really represents a new court, uh a new category.

Um You know, if you look at the, the forecast or ID CS are forecasting that, you know, A IP CS will be about 60% of all PC shipments by 27.

So really, we're at the front end of that, we're seeing tremendous interest in that as uh as our new products will come to market uh this summer.

So as you, as you reported earlier this week, in partnership with Microsoft, we unveiled uh our next generation consumer and commercial A IP CS uh two of them in particular powered by Qualcomm Snapdragon uh lead processor.

These are our newest offerings.

Uh They're, they're out the summer, as I said, Lenovo Yoga slim seven and our Lenovo thinkpad T 14.

Really?

I think the there, there's excitement for this as we as, as there's new levels of personalization and performance across our our portfolio.

So, and, and you ask where the growth is coming from?

I think the industry is, is ready.

You know, it's it's kind of repaired over the last couple of years.

There's just a lot of excitement that, that the refresh that is upon us.

Uh this refresh cycle that all of our partners and customers are are anticipating after, you know, five years of, of COVID and constraints ready to really look to upgrade and bring these new capabilities uh to, to the market.

Ryan.

Um You mentioned the Yoga Slim seven X which I love the name of that one.

Is that uh a product I've seen some reviewers say it's designed to take on the Macbook Air, Apple's Macbook Air directly.

Is that how you see that product?

And do you expect to take some market share from Apple?

Yeah, I do.

As I said, it represents a new category and I think there's uh they're, they're purpose built is the way we look at it.

They're, they're built to handle the advanced A I workloads uh they're using modern and custom hardware and software.

So latest CPU GP UN pu you might have heard the term NPU, it's less familiar neural processing unit.

This is purpose built chip A I but you know, Lenovo also has our Lenovo A I core chips.

They work with the existing CPU GP U architecture and they basically dynamically adjust power and, and and efficiency depending on the task that the user uh and the workload that's, that's being used.

So I think these are, these are exciting new products that are purpose built and, and yes, they're, they're, they're meant to uh attract new users and users from other ecosystems and very excited uh with, with the broader uh ecosystem and our partners.

There's a lot of excitement around uh the A I PC launch and Ryan, I was in, I was reading that uh you're working with Microsoft on these A IP CS outside of China but inside China.

No.

So, so what A I features do your Chinese customers then benefit from?

And, and who's providing that, Ryan?

Yeah, so there's some custom uh Lenovo software in China for China.

Uh We're really working on a broader uh common ecosystem, you know, every one of the products that I mentioned here uh today is equipped with the Windows 11 operating system, co pilot plus functionality.

Um So that, that's for our rest of world operations.

Uh You know, where I'm focused and really uh where I'm focused is in business and consumer and bringing products across the, the portfolio in North America to service that market.

Are you seeing any kind of issues related to the tariff environment or the trade environment that's affecting your supply?

No, honestly, after the last five years, uh it's probably the best that I've seen it.

Um You know, there's obviously 100 hundreds of millions of components.

You, you have constraints here and there, whether it's supply chain, different, different issues.

But really, I think we're in the cleanest place we've been, I think we're ready uh to, to uh as I said, take advantage of, of the opportunity that's in front of us.

Just an enormous install base that exists in the market here uh over the last couple of years.

So um look, there's always some issues, but I think we're probably in the most healthy position that we've been in in several years.

And Ryan, you know, obviously you got a lot of enthusiasm there for A IP CS.

What about A I and enabled smartphones, Ryan?

Are you also e enthusiastic about that category?

Yeah, I mean, we're uh enthusiastic across the whole portfolio.

If you look at like one of the true differentiators for Lenovo, I think it's our pocket to cloud uh portfolio.

So pocket is the is the Razor uh Motorola line of phones and you know, all the way to the cloud and everything in between.

So when we look at this.

Uh we see the opportunity.

Uh when we say A I for all, we look at hybrid A IA I.

So uh at tech world last fall, we announced our hybrid A I approach and that's where public, private and personal foundation models coexist.

And we think this is a world where A I can operate exclusively within a device, a phone or A PC or securely in a data center.

Uh and, and protect the privacy of users.

And you know, as you're aware the need for A I infrastructure, especially in servers and storage is going to dramatically increase over the next 3 to 5 years.

Uh We're just seeing hybrid A I driving greater demand for infrastructure and customers are increasingly asking for custom solutions, particularly consulting design, deployment and maintenance of that A I.

So really interesting time and, and we continue to build out that port polio with our ecosystem partners.

In just the last two weeks, we've announced new offerings with NVIDIA Netapp and new Tai.

Uh So I can go into more detail on those but really exciting time with just a lot of innovation and a lot of uh work being put into the overall portfolio from phone, all the way to the data center.

All right, Ryan, thank you so much for taking the time to chat today.

Appreciate it.

Thanks for having me.