According to intelligence reports, Caitong Securities Co.,Ltd. recently published its inaugural coverage analysis. Given the company's solid market leadership position and accelerating penetration of AI PCs and AI servers, the firm assigned LENOVO GROUP a "Buy" rating.
The analysis highlights that as the world's largest PC manufacturer and a truly globalized enterprise rooted in China, LENOVO GROUP is leveraging digital transformation to drive long-term growth. Based on IDC data, the company expanded its global market share to 24.8% in the second quarter of 2025. The acceleration of AI PC penetration presents additional growth opportunities.
The AI PC market is expected to experience rapid expansion in the coming years, with 2024 marking the inaugural year for AI PC market development. Shipment volumes have shown significant improvement, with penetration rates projected to reach 85% of the global PC market by 2027. Sales revenue is anticipated to grow from 14.1 billion yuan in 2023 to 131.2 billion yuan in 2027.
From a pricing perspective, AI PC unit prices are expected to maintain steady upward momentum. As AI technology becomes more widespread and hardware costs decline, AI PC performance and cost-effectiveness will continue to improve, accelerating market penetration and replacement cycles in the consumer segment. Overall, AI PC development is expected to drive both volume and price growth in the PC market, creating additional business opportunities for the company.
The report emphasizes that SSG benefits from AI-enabled solution services. According to IDC data, China's IT services market reached 377.9 billion yuan in 2024, representing 3.8% year-over-year growth. The second half showed market scale of 196.3 billion yuan with 6.3% year-over-year growth, driven by AI infrastructure, industry intelligent solutions, and data element industry collaboration as core growth engines.
As a crucial component of the company's strategy to "accelerate China's intelligent transformation through hybrid AI," the solution services division employs a "one engine, three arrows" strategic framework, continuously releasing growth momentum. In 2024, it successfully topped China's IT services market, maintaining its position as the fastest-growing IT services revenue provider for eight consecutive years.
Gartner forecasts that enterprise software integration with autonomous AI will surge from less than 1% in 2024 to 33% by 2028, while over 15% of daily business decisions will be autonomously completed by AI agents.
Caitong Securities Co.,Ltd. believes SSG's growth fundamentals stem from IDG and ISG's extensive hardware deployment and customer resource accumulation, combined with early strategic positioning, AI innovation iteration, and "internal generation, external application." SSG is expected to maintain double-digit growth over the next three years with strong profit contribution.
ISG has established end-to-end infrastructure solutions, expanding to comprehensive server, storage, and software product lines. The server product family now achieves intelligent coverage from edge to cloud computing. ISG's vision is to become the world's fastest and ultimately largest end-to-end infrastructure solutions provider.
Revenue growth has accelerated, with liquid cooling technology contributing to increased orders. Infrastructure Solutions Group revenue increased 36% year-over-year in 1QFY25/26, primarily driven by major client cloud investments and enterprise market expansion, resulting in strong server demand. Supported by robust product lines and leading liquid cooling technology, artificial intelligence server business revenue more than doubled year-over-year.
The analysis identifies three strategic advantages of ODM+: 1) Eliminating intermediaries while leveraging supply chain systems to shorten product development-to-market cycles and reduce costs; 2) The company possesses significant supply chain scale and global support capabilities; 3) Ownership of end-to-end hyperscale data center organization.
By business segment analysis: 1) IDG: PC business benefits from accelerating AI PC penetration, though pandemic and Win10 update-driven replacement demand is gradually diminishing. Mobile business is expected to continue expanding product categories, markets, and premium device ratios. Projected FY25/26-FY27/28 IDG revenue growth rates are 9.1%, 5.8%, and 6.4%, with operating profit margins of 7.4%, 7.7%, and 8.0%; 2) ISG: Considering significant AI server market growth potential and the company's ability to capture market share through liquid cooling technology and ODM+, continued investment in AI capability expansion and enterprise infrastructure transformation is expected. Profitability should improve with business scaling, with projected FY25/26-FY27/28 ISG revenue growth rates of 19.5%, 15%, and 15%; 3) SSG: Given AI infrastructure, industry intelligent solutions, and data element industry collaboration driving IT services market growth, the company maintains its eight-year record as the fastest-growing IT services revenue provider. Leveraging hybrid AI advantage frameworks, double-digit revenue growth and improved profitability are expected, with projected FY25/26-FY27/28 SSG revenue growth rates of 16.1%, 13.0%, and 12.0%, and operating profit margins of 22.2%, 22.4%, and 22.6%.
Caitong Securities Co.,Ltd. anticipates continued increased marketing investments for AI PC promotion, while organizational restructuring should further reduce administrative expense ratios. R&D expense ratios are expected to increase moderately under continued AI capability expansion investments. FY24/25 features lower tax rates due to a $282 million one-time tax credit in the third quarter. Overall, net profit is expected to show further improvement, with projected FY25/26-FY27/28 adjusted net profit growth rates of 12.9%, 16.8%, and 16.0%.