Lenovo Stock: Revenue Soars While Profit Plunges

Lenovo reported a significant 23% revenue increase to nearly $17 billion in its fourth quarter, beating analyst expectations of $15.6 billion. However, this positive development was overshadowed by a dramatic 64% collapse in net profit attributable to shareholders, which fell to just $90 million—well below the consensus forecast of $225.8 million. The company cited non-cash impairments on warrants as the primary factor behind this profit decline, along with increased investments in artificial intelligence technology and supply chain reinforcement against global trade uncertainties. The unexpected profit drop sent Lenovo shares down 2.1% in Hong Kong trading despite the impressive revenue performance.

AI Strategy Offers Hope Amid Challenges

Looking at the full fiscal year 2024, Lenovo's performance appears more encouraging, with annual revenue rising 23% to $69.08 billion and profit increasing by 37% to $1.38 billion. The company maintains an optimistic outlook, focusing heavily on hybrid artificial intelligence innovations to drive future growth. This strategy is already showing promise, with AI-enabled PCs growing from 2.8% to 7% of sales. Management announced a final dividend of 3.9 US cents per share, signaling confidence despite near-term headwinds. The upcoming end of Windows 10 support has become another growth catalyst, particularly in Germany where Lenovo expanded its PC market share to 33.4% with a 14% increase in sales volume.

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Source StockWorld