Recently, CICC published a research report following discussions with company management regarding their latest AI smart device strategy and outlook. CICC believes that Lenovo Group continues to deepen its "one core, multiple endpoints" strategic layout in AI edge computing, not only innovating in hardware with products featuring rollable screens and transparent displays, but also strengthening local large model capabilities and enhancing cross-device experiences at the software level. The firm is optimistic that continuous innovation will drive the company's steady market share growth in global PC and mobile markets.
Additionally, tariffs and other global macroeconomic environmental changes are issues that investors pay close attention to for an internationalized company like Lenovo Group. CICC believes Lenovo's globalized production capacity layout leads the market, providing the company with more prominent and flexible systemic risk response capabilities.
**AI PC Progress Smooth, IDG Growth Diversified**
According to IDC and public earnings calls, global PC shipments grew 6.5% year-over-year in Q2 FY25, with Lenovo's growth outpacing the industry at 15.2% year-over-year, continuously expanding its leading advantage with market share reaching 24.6%. This was mainly attributed to the company's precise product iterations such as AI PCs and global supply chain layout.
AI PC penetration is accelerating, with Lenovo's AI PCs (defined by Lenovo as having five key characteristics) accounting for 27% of total notebook shipments in the Chinese market during Q2 FY25. During this event, we experienced firsthand PC "black technologies" such as rollable screens and transparent displays. Based on hardware innovation, the company expects edge-side models to iterate and upgrade at a pace of one generation every six months.
In the mobile segment, the company's revenue grew 14% year-over-year in Q2 FY25, outpacing the market for the eighth consecutive quarter. We believe this was mainly due to effective breakthroughs of Moto Razr foldable phones, Edge series, and other high-end models in overseas markets.
**Cross-Device Experience Innovation Upgrade, Multi-Endpoint Collaborative Ecosystem Becoming More Complete**
At the mobilization meeting at the end of FY25, Lenovo IDG President Luca emphasized the company's "one core, multiple endpoints" strategy, using one AI intelligent agent to serve multiple devices including PCs, smartphones, and tablets. For the domestic market, Lenovo empowers AI PCs and other terminals with the "Tianxi" personal super intelligent agent. Since Tianxi's launch, user engagement has continued to improve. According to official social media, as of the end of Q2 FY25, the average Weekly Active User (WAU) rate reached 40%.
During this event, we saw Lenovo's continuous upgrades in seamless cross-device experiences, echoing the recent Lenovo Innovation World conference held in Berlin. We recommend investors pay attention to Lenovo's SmartConnect super-connectivity capability transformation and the company's future continuous innovations in file sharing, app flow, open ecosystem, and other dimensions.
**Global Production Capacity Layout Strengthens Response Capability Under International Policy Changes**
Lenovo ranked eighth globally in Gartner's 2025 Global Supply Chain rankings, with over 30 owned or partnered manufacturing bases across 11 global markets, constructing a "China + N" strategic layout. We believe the globalized production capacity layout will provide the company with safeguards against tariffs and other macroeconomic uncertainties.
Based on this, considering the company's software and hardware innovation technology foundation and potential for continued market share improvement in the edge AI market, as well as valuation window progression, CICC raised the target price by 10.4% to HK$14.8 based on 14.0x P/E for FY2026, corresponding to 34.6% upside potential.