With non-HKFRS net profit surging 22% year-on-year and HKFRS net profit doubling, LENOVO GROUP (00992) delivered a strong start to fiscal year 2026. On August 14, LENOVO GROUP released its Q1 2025/2026 financial results, achieving revenue of 136.2 billion yuan, up 22% year-on-year, with non-HKFRS net profit reaching 2.816 billion yuan, also up 22% year-on-year. Under HKFRS, shareholder net profit soared 112% year-on-year, demonstrating robust profitability. During this period, all business segments flourished, maintaining strong growth momentum.
The company's three major business groups - IDG Group, ISG Group, and SSG Group - generated revenues of $13.56 billion (approximately 97.3 billion yuan), $4.29 billion (approximately 31 billion yuan), and $2.258 billion (approximately 16.3 billion yuan) respectively, representing year-on-year growth of 17.8%, 35.8%, and 19.8%.
Under the challenging global business environment of Trump's "tariff war," LENOVO GROUP maintained double-digit performance growth and stood out in the industry, thanks to the company's "anti-fragile" model that ensures sustainable business growth. This "anti-fragile" model encompasses the company's multi-dimensional advantages, including leading market share and brand presence across diversified business strategies, global market presence with robust supply chain systems, and forward-looking positioning in the AI sector.
Particularly noteworthy is the AI sector positioning. Since announcing the "AI for All" initiative in 2023, the company has accelerated AI integration across all businesses. Following the launch of AI PCs in May last year, it has solidified its leadership position in personal intelligent AI hardware. Driven by AI PCs, the company's PC business achieved its fastest growth in 15 quarters during this period.
With comprehensive business acceleration and fundamental-driven growth, the company is entering a new investment opportunity phase.
**Comprehensive High Growth with Multiple Performance Indicators Reaching Historical Highs**
The global business environment in Q2 2025 was indeed challenging. In April 2025, Trump launched a "tariff war" against various countries worldwide under the banner of "reciprocal tariffs," particularly imposing higher tax rates on China. Both the EU and China, as major global economies, retaliated, igniting the tariff war. This tariff conflict intensified global trade instability and undoubtedly triggered deep restructuring of global supply chains.
During the Q4 earnings call in May, the most frequently asked questions from media to management concerned the impact of tariffs on group performance. At that time, Group Chairman and CEO Yang Yuanqing made a commitment of "no decline in market share, no decline in profits."
Facts proved that even under such circumstances, LENOVO GROUP maintained strong performance growth. This fiscal quarter, the company's performance indicators were exceptionally impressive, with revenue hitting a single-quarter historical high and profitability doubling. From a quarterly perspective, the company has achieved medium-to-high double-digit growth in both revenue and net profit for five consecutive quarters.
From a business perspective, all segments achieved double-digit growth, with ISG Group leading in growth rate. The IDG Group, ISG Group, and SSG Group accounted for 71.5%, 22.78%, and 11.99% of total revenue respectively.
Additionally, under its global layout, the company achieved growth across all four major regions: Asia-Pacific, China, Europe-Middle East-Africa, and Americas, with particularly significant growth in key regions. The Asia-Pacific market grew 37%, while the China market expanded 36%.
LENOVO GROUP outpaced industry growth levels across all sectors and continuously consolidated its leadership position and strong competitiveness during the downcycle. Taking PC business as an example, according to IDC's Q2 2025 PC shipment data, global PC shipments increased 6.5% year-on-year in Q2 2025, while LENOVO GROUP's shipments grew 15.2%, with market share rising to 24.8%, maintaining its global leadership position. Second-place HP only grew 3.2%, while third-place Dell declined 3%, with their market shares falling to 20.7% and 14.3% respectively.
The outperforming results under adverse conditions reflect LENOVO GROUP's clear business strategy and the development achievements of its hybrid AI approach, creating an unshakeable "anti-fragile" model.
**Three Core Dimensions of the "Anti-Fragile" Model**
LENOVO GROUP's "anti-fragile" model is based on its performance resilience and sustainable business growth demonstrated in adverse environments, tested through historical challenges, maintaining industry leadership during force majeure risks and economic downturns. The company's "anti-fragile" model is primarily manifested in three core dimensions:
**First Dimension: Industry-Leading Products Across Diversified Businesses**
While LENOVO GROUP is widely known as a PC supplier, this represents only one of the company's businesses. In recent years, non-PC businesses have grown rapidly, accounting for nearly 50% of revenue. The company operates three major business groups: IDG Group, ISG Group, and SSG Group, each maintaining steady growth and avoiding single-business risks. Multiple sectors within these three business groups hold industry leadership positions, providing strong competitiveness for business development.
Taking IDG Group as an example, it achieved strong revenue growth of 17.8% year-on-year, with PC business recording its fastest growth in 15 quarters. Notably, AI PCs continue to be the industry's growth driver. In Q1 FY2026, AI PCs with "five major AI characteristics" accounted for 27% of total notebook shipments in LENOVO GROUP's China market. Globally, AI PC shipments accounted for over 30% of total PC shipments, with Windows AI PC market share expected to exceed overall Windows PC market share, maintaining the top position in the global Windows AI PC market.
Industry data shows that AI PC shipments are expected to grow 77% year-on-year in 2025 and potentially reach 70% of total PC shipments by 2027. The high growth and vast market prospects of AI PCs will continue to consolidate LENOVO GROUP's No.1 position globally in the PC sector, widening the share gap with competitors and driving sustained high growth for IDG Group.
**Second Dimension: Global Market and Supply Chain**
LENOVO GROUP's business covers 180 global markets, achieving balanced growth across regions through diversified market positioning. Asia-Pacific, China, Europe-Middle East-Africa, and Americas contribute 20% to 33% each to total revenue, avoiding single-market risks. In Q1 FY2026, all major regional markets drove growth comprehensively, with China and Asia-Pacific (excluding China) both achieving revenue growth exceeding 35%.
Notably, LENOVO GROUP's global market presence extends beyond mere sales markets. The company has established global manufacturing operations with over 30 manufacturing bases in more than 10 countries, enabling a unique "global resources, local delivery" model, creating a "China+N" approach.
Moreover, the company's ODM+ end-to-end operations ensure cost competitiveness, while local delivery enables rapid customer response and benchmarking against industry best practices. "China+N" and manufacturing globalization have created an unbreachable supply chain ecosystem, providing manufacturing cost advantages and supply-side advantages while maintaining cutting-edge technological capabilities and product competitiveness.
The company maintains strong partnerships with long-term suppliers including upstream chip giants like NVIDIA and Qualcomm. Additionally, it consistently ranks in the top 10 of Gartner's global supply chain rankings, ranking first among all Asia-Pacific enterprises.
**Third Dimension: Forward-Looking AI Positioning**
LENOVO GROUP announced a research and development doubling plan in 2023, based on AI investment context, simultaneously launching the "AI for All" initiative. In May 2024, it launched the world's first AI PC, accelerating AI penetration across all businesses, continuously enhancing product capabilities and empowering sustainable business growth. Since 2024, the company's three major business groups have achieved growth for five consecutive quarters.
Under its hybrid AI strategy, AI agent development has far exceeded market expectations. In personal AI agents, the company has created diversified products including AI PCs, AI smartphones, and AI terminal devices. In China, it launched AI PC products equipped with the "Tianxi" personal super AI agent, consolidating its global leadership in AI PCs.
In enterprise AI agents, ISG and SSG serve as scenario gateways, with AI infrastructure business revenue growing 155% year-on-year, fully validating the company's enterprise AI agent positioning achievements.
Notably, the company is accelerating the construction of a unified AI gateway, exploring new paradigms for cross-terminal and cross-ecosystem intelligent experiences, while building an artificial intelligence model factory and developing AI agent platforms to promote comprehensive implementation of LENOVO GROUP's hybrid artificial intelligence advantage portfolio.
AI agents have become important track gateways in the AI era. The company has taken the lead in completing positioning across different sectors, firmly grasping first-mover advantages, capturing market share, and consolidating leadership positions.
**Upward Valuation: Performance Breakthrough and New Journey**
The "anti-fragile" model has built strong competitive barriers and solid moats for LENOVO GROUP, driving the company to maintain evergreen performance throughout economic cycles and economic risks beyond control. The company's robust fundamentals are also reflected in its valuation, showing a long-term bull trend on an annual basis, with market capitalization increasing five-fold since 2018, providing considerable market capitalization premium returns for long-term investors.
When Trump launched the tariff war in April this year, causing market turbulence, the company's performance far exceeded the broader market. Although there was some retracement that month, it was clearly more resilient, and it began sustained upward momentum the following month, recording gains for four consecutive months with market capitalization increasing 24.7%.
Value investors continue to increase positions, with Stock Connect holdings rising. As of August 15, Stock Connect held 878 million shares, an increase of 123 million shares compared to early April, with market value increasing by 1.479 billion Hong Kong dollars, fully demonstrating investor recognition of the company's long-term investment value.
However, the company's valuation remains undervalued, with current PE (TTM) at only 10x. Previous valuation logic was primarily based on performance growth drivers, with performance largely dependent on PC business, thus focusing more on PC business growth logic. But with non-PC business accounting for nearly 50%, ISG and SSG businesses growing rapidly, especially driven by AI agents, valuation should be reshaped based on AI track positioning.
In the AI golden age of the next decade, LENOVO GROUP, leveraging AI agent first-mover advantages, leadership position advantages, product technology advantages, and globalization advantages, is poised to lead the development of the multi-trillion AI track and reflect this in performance growth and long-term value release, further driving upward valuation.
Referencing NVIDIA's valuation trajectory, the company has significant appreciation potential based on AI track valuation logic. The company has also received favor from major investment banks with continuous target price upgrades. For example, CLSA believes the company's Q1 earnings far exceeded market expectations and raised the target price to HK$12; JPMorgan considers the company's PC strength promising for 2026 earnings improvement and raised the target price to HK$13; Citi Research increased LENOVO GROUP's target price from HK$13.30 to HK$13.60; HSBC Research believes the company benefits from commercial PC replacement cycles and raised the target price to HK$12.9.
Combining major investment bank target prices, the average stands at HK$13, representing a 20% premium over current prices.
In summary, benefiting from the "anti-fragile" model, LENOVO GROUP maintains sustained high performance growth during downturns and economic risks beyond control, with comprehensive business flourishing and significantly improved profitability. Its AI agent development far exceeds peers, with AI PC global leadership firmly established, maintaining strong competitiveness. In the multi-trillion AI track, the company will also welcome investment opportunities for valuation reshaping.