Investment bank Morgan Stanley has issued a research note following Lenovo Group's recent presentation at a China BEST conference, where the company outlined expectations for continued acceleration in its Infrastructure Solutions Group (ISG) revenue. The firm also indicated that personal computer demand is anticipated to moderate in the second half of 2026, while maintaining its net profit margin objectives without change.

Consequently, Morgan Stanley has reaffirmed its "Overweight" rating on LENOVO GROUP (00992), setting a price target of HK$46. The bank noted that Lenovo continues to observe robust demand for both general-purpose and AI servers, with cloud customers, including new cloud providers (neocloud), representing approximately 70% of revenue. The remaining 30% is attributed to enterprise and small-to-medium business clients.

Based on current projections, the bank anticipates that revenue growth will continue to accelerate year-over-year in the fiscal second quarter ending September 30, with profit margins expected to remain stable on a sequential basis. Should AI demand surpass expectations, revenue growth could potentially be even stronger. The bank also highlighted that demand for enterprise general-purpose servers remains solid, which is expected to sustain margin expansion.

The report also noted that while Lenovo may enter the GB300 market at a slightly later stage, the company believes its VR200 shipment timeline is aligned with that of leading suppliers. Management has reiterated its commitment to maintaining the Intelligent Devices Group (IDG) operating margin at approximately 7% quarter-over-quarter for the fiscal second quarter ending September 30, through ongoing cost reduction initiatives. Additionally, management has reaffirmed its short-term net profit margin target of 5%, with a longer-term ambition to increase it to a range of 5% to 8%.