- Lenovos AI -Server -Sales exploded in 2026 but the profits remain the flat shin
- Lenovo’s CSP -Division is bleeding cash in spite of demand for hardware
- Explosive AI Inquiry reveals data center economy stacked against OEMs
Infrastructure Solutions Group (ISG) at Lenovo has seen record-breaking revenue growth in recent quarters, especially from AI-related servers, with the latest financial quarter, seeing it record $ 4.29 billion in sales, an increase of 35.8% year by year.
This follows several consecutive quarters of expansion, which is largely driven by increasing demand for generative AI and high-performance computing workloads.
Despite the rapid and consecutive expansion, the group still reported an operating loss of $ 86 million, emphasizing the difficulty of turning growth into profitability, even for huge companies like Lenovo.
Revenue waves, profits
The graph above shows a striking gap between turnover and profit in AI infrastructure.
ISG’s annual waves of revenue strongly after 2022, climbing against nearly $ 20 billion in 2026, but ISG’s annual operating income remains flat and hovers just above or below zero.
This contrast shows how even rapid revenue growth in the AI sector is not necessarily translated into meaningful profitability as high costs continue to weigh heavily on margins.
According to The next platformLenovo generated $ 18.83 billion in sales and $ 2.77 billion in gross profits, a margin of 14.7%.
Lenovo’s CFO, Winston Cheng, said the margins would have been “north of 17%” if the cloud service provider (CSP) segment was excluded.
“If gross profits were ‘north of 17 percent’ call it 17.2 percent, so it rounds down- So it had non-CSP part of Lenovo $ 16.42 billion in sales and about $ 2.82 billion in gross profit,” The next platform said.
Therefore, the CSP division announced a gross loss of $ 50 million and an operating loss of $ 305 million when the costs are awarded proportionately.
This means Lenovo loses $ 1.00 for every $ 7.90 it earns by selling CSP hardware, which is largely tied to AI systems.
The next platform Completed Lenovo’s ISG sold nearly $ 3 billion in AI Systems in Q1 F2026, an increase of 2.8x year by year and 18.7% from the 4th quarter, and its AI pipeline is estimated at over $ 10 billion, probably almost $ 12 billion.
Still, with fleeting demand for server, US-China tensions and thin AI/HPC margins, Lenovo’s hard work and gains have not translated into strong profits.
Lenovo’s challenges mirror those that other OEMs face in the data center industry. Server expenses have been inconsistent and the margins on AI hardware are thin, leaving most of the profits with component suppliers such as TSMC and NVIDIA.
