LENOVO GROUP Rises Over 4% Following Collaboration with Nvidia to Develop Enterprise-Level AI Solutions

Goldman Sachs maintained a positive outlook on Lenovo Group due to several key factors: 1. Leading Position in the PC Market: Lenovo's strong market presence in the PC sector supports its growth potential. 2. Product Portfolio Upgrading: The company's shift towards AI PCs indicates a forward-looking strategy that aligns with technological advancements. 3. Superior Supply Chain Management: Lenovo's effective management of its supply chain, especially in the context of rising memory costs, positions it well against competitors. 4. Growth in Server Business: The anticipated demand for generative AI presents new opportunities for Lenovo in AI infrastructure and edge AI equipment. As a result of these factors, Goldman Sachs maintained a Buy rating on Lenovo, albeit with a slight reduction in the target price from HKD13.62 to HKD13.25.

The analyst rating from Macquarie for LENOVO GROUP remains at "Outperform" despite a trimmed target price, primarily due to the company's better-than-expected financial results for the second fiscal quarter. The report highlights that LENOVO achieved a 15% year-over-year revenue growth, surpassing both broker and market forecasts. Additionally, the company successfully reduced its operating expense ratio and saw a significant increase in non-HKFRS net profit, which also exceeded expectations. However, the adjustments to the profit forecasts for FY26-28 reflect concerns over increased revenue in certain segments but a reduced operating profit margin.

Morgan Stanley downgraded LENOVO GROUP's rating from Overweight to Equalweight and cut its target price from HKD13 to HKD10.2 due to rising memory input costs, which have led to a decline in profit margins and pressure on valuation multiples. Despite potential for revenue and profit growth in the upcoming quarter, these cost pressures influenced the decision to adjust the rating.

Goldman Sachs maintained a Buy rating on LENOVO GROUP due to several positive factors: the company is expected to achieve a compound annual growth rate (CAGR) of 11% in revenue from FY25-27, driven by higher value per unit and increased market share from AI PCs. Additionally, LENOVO's PC shipments grew by 17% year-over-year in the September quarter, outperforming the global market growth of 9%. The firm anticipates further growth in AI PC products and improvements in the company's product portfolio, leading to an increase in the target price from HKD13.56 to HKD13.62.