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Chinese tech company Lenovo (0992.HK), opens new tab reported hefty gains in quarterly revenue and net profit that beat expectations and said it would benefit from the adoption of DeepSeek's artifical intelligence model in its products.
Driven by robust demand for its AI-powered servers, Lenovo's third-quarter revenue surged by a fifth to $18.8 billion, ahead of an LSEG consensus estimate of $17.8 billion.
Net profit more than doubled from the previous year to $693 million, trouncing an average forecast of $367.7 million.
Though best known for its personal computers, the company has diversified in recent years, expanding into software and services. It also has positioned itself to benefit from the booming demand for AI applications by expanding its AI server and software businesses.
Lenovo launched its first AI-powered PCs in China last May and followed that with a global rollout in September. CEO Yang Yuanqing has projected that AI PCs will account for a quarter of Lenovo's shipments by 2025, potentially reaching 80% by 2027.
An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China November 15, 2019. REUTERS/Jason Lee/File Photo Purchase Licensing Rights, opens new tab
The company said this week it has integrated technology from startup DeepSeek - which has upended the AI sector with its low-cost model - into its devices, including PCs and tablets.
"DeepSeek has improved AI efficiency. The new models with a high inferencing efficiency and low computing power costs will democratise access to AI," Yang told Reuters on Thursday in a post-earnings interview.
That would drive demand and increase the ways in which AI can be used, he said, adding that the emergence of DeepSeek may also boost demand for GPU servers.
Lenovo's infrastructure solutions group, which includes servers, saw a 59% revenue increase in the December quarter compared with the previous year.
The solutions and services group, which offers cloud-based software for enterprise clients, posted $2.3 billion in revenue, up 12% from a year earlier.
Lenovo's Hong Kong-listed shares initially jumped after the results but were last trading down 6%. They have surged 17% for the year to date.
[Reuters]