- Lenovo’s AI servers AI exploded in 2026, but the benefits remain flat
- Lenovo’s CSP division is bleeding money despite the demand for growing equipment
- IA’s explosive demand reveals that the economy of the data center stacked against OEM
Lenovo’s infrastructure solutions (ISG) Group has experienced record income growth during recent quarters, in particular from servers linked to AI, with its latest financial quarter seeing him register $ 4.29 billion in sales, an increase of 35.8% year by year.
This follows several consecutive trimesters of expansion driven largely by an increase in generative AI demand and high performance IT workloads.
However, despite the rapid and consecutive expansion, the group has always declared an operating loss of $ 86 million, stressing the difficulty of converting growth into profitability, even for huge companies like Lenovo.
Overcome income, profits do not
The above graph shows a striking gap between income and profits in AI infrastructure.
ISG annual revenues increased sharply after 2022, climbing around nearly $ 20 billion by 2026, but the ISG annual operating profit remains stable, oscillating just above or below zero.
This contrast shows how rapid revenue in the AI sector does not necessarily result in significant profitability, because high costs continue to weigh heavily on the margins.
According to The next platformLenovo generated $ 18.83 billion in sales and $ 2.77 billion in raw profits, a margin of 14.7%.
Lenovo’s financial director Winston Cheng said that the margins would have been “north of 17%” if the Cloud Service Sourne (CSP) segment was excluded.
“If the raw profits were” north of 17% “- call it 17.2 percent so that it rounds up- then the non-CSP part of Lenovo had $ 16.42 billion in sales and approximately $ 2.82 billion in raw profits”, ” The next platform said.
Consequently, the CSP division posted a gross loss of $ 50 million and an operating loss of $ 305 million once the costs are allocated in proportion.
This translates into Lenovo losing $ 1.00 for each $ 7.90 he earns by selling CSP equipment, which is largely linked to AI systems.
The next platform The conclusion of the ISG of Lenovo sold nearly $ 3 billion in AI systems in the first quarter F2026, up 2.8 times over a year and 18.7% compared to the fourth quarter, and its IA pipeline is estimated at more than $ 10 billion, probably nearly $ 12 billion.
However, with the demand for volatile servers, the American-Chinese tensions and the AI / HPC thin margins, the hard work and the Lenovo gains did not translate into strong benefits.
Lenovo’s challenges reflect those encountered by other OEMs in the data center industry. Server expenses have been incoherent and margins on AI equipment is thin, leaving most of the profits with component suppliers like TSMC and NVIDIA.
