- The sales of the Lenovo’s server exploded in 2026, but the profits are still flat
- The Lenovo CSP Division bleeds effective despite the growing hardware demand
- The explosive demand of AI reveals the economy of the data centers stacked against the OEM
The Infrastructure Solutions Group (ISG) in Lenovo has seen a growth of record income in the last quarters, particularly AI -related servers, and its most recent financial quarter saw a record of $ 4.29 billion in sales, an increase of 35.8% year after year.
This follows several consecutive expansion rooms largely driven by the growing demand for generative and high performance computer workloads.
However, despite the rapid and consecutive expansion, the group still reported an operational loss of $ 86 million, which underlines the difficulty of converting growth into profitability, even for large companies such as Lenovo.
Income on the increase, gains does not
The previous graph shows a surprising gap between income and earnings in AI infrastructure.
The annual income of ISG increases sharply after 2022, rising to almost $ 20 billion by 2026, but ISG’s annual operational income remains stable, hovering just above or below zero.
This contrast shows how even rapid growth of income in the AI sector does not necessarily translate into significant profitability, since high costs continue to weigh a lot on the margins.
According The next platformLenovo generated $ 18.83 billion in sales and $ 2.77 billion in gross profits, a margin of 14.7%.
Lenovo’s financial director, Winston Cheng, said the margins would have been “north of 17%” if the cloud service provider segment (CSP) was excluded.
“If the gross profits were ‘north of 17 percent’, call it 17.2 percent, so it rounds, then the Lenovo non Spe part had $ 16.42 billion in sales and around $ 2.82 billion in gross profits.” The next platform saying.
Therefore, the CSP division registered a gross loss of $ 50 million and an operational loss of $ 305 million once the costs are assigned proportionally.
That translates into Lenovo losing $ 1.00 for every $ 7.90 that wins when selling CSP hardware, which is largely linked to AI systems.
The next platform The ISG of Lenovo concluded that it sold almost $ 3 billion in AI systems in the first F2026 quarter, more than 2.8 times year after year and 18.7% from the fourth quarter, and its IA pipe is estimated at more than $ 10 billion, probably about $ 12 billion.
However, with the volatile server demand, US-China tensions and the thin margins of AI/HPC, the hard work and profits of Lenovo have not translated into strong profits.
Lenovo’s challenges reflect those facing other OEMs in the data center industry. Server spending has been inconsistent, and the margins in the Hardware are thin, leaving most gains with component suppliers such as TSMC and NVIDIA.
