Chinese tech giant Lenovo reported stronger-than-expected quarterly revenue and net profit, crediting the integration of DeepSeek's artificial intelligence model for future growth.

Fueled by soaring demand for AI-powered servers, Lenovo's third-quarter revenue surged 20% to $18.8 billion, surpassing the LSEG consensus estimate of $17.8 billion.

Net profit more than doubled year-over-year to $693 million, far exceeding analysts' expectations of $367.7 million.

While Lenovo remains best known for its personal computers, the company has expanded into software and services, positioning itself to capitalize on the surging demand for AI applications.

It launched its first AI-powered PCs in China last May, followed by a global rollout in September. CEO Yang Yuanqing has projected that AI PCs will make up a quarter of Lenovo's shipments by 2025 and could reach 80% by 2027.

The company announced it has integrated DeepSeek's low-cost AI technology into its products, including PCs and tablets. "DeepSeek has improved AI efficiency.

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The new models, with high inferencing efficiency and low computing power costs, will democratize access to AI," Yang told Reuters in a post-earnings interview.

Yang added that DeepSeek's emergence could boost demand for GPU servers, further driving AI adoption. Lenovo's infrastructure solutions group, which includes servers, saw a 59% revenue jump in the December quarter, while its solutions and services unit, which provides cloud-based software to enterprise clients, reported $2.3 billion in revenue, up 12% year-over-year.

Despite the strong earnings report, Lenovo's Hong Kong-listed shares initially rose before slipping 6% in later trading. The stock remains up 17% for the year to date.

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