This week, CITIC Securities released a research report stating that LENOVO GROUP continues to benefit from AI-driven growth, demonstrating robust performance and maintaining its leading position in the PC market. The report provided the following analysis of its interim results:

All three business groups achieved double-digit growth, with the Hybrid AI strategy delivering significant results. In the first half of fiscal 2025/26, each of the company’s three business groups recorded year-on-year double-digit revenue growth. The firm’s steadfast execution of its "Hybrid AI for All" strategy has driven AI-related revenue to account for 29% of total revenue, up 15 percentage points YoY, highlighting AI as the core growth engine. At Lenovo Innovation World 2025, the company unveiled a comprehensive AI-powered device portfolio spanning consumer, commercial, and mobile segments, including high-performance PCs, smart tablets, immersive gaming devices, and Motorola smartphones, reinforcing its vision of democratizing AI.

**IDG Business Shows Strong Growth, Rapid AI PC Adoption** In the first half of fiscal 2025/26, the Intelligent Devices Group (IDG) posted a 15% YoY revenue increase. In Q2, Lenovo’s global PC market share rose 1.8 percentage points YoY to a record 25.6%, solidifying its top position. AI PCs, a strategic focus, performed exceptionally well, accounting for 33% of total PC shipments in Q2. The company also maintained leadership in the Windows AI PC market with a 31.1% share.

**ISG Business Expands Rapidly on Strong AI Server Demand** The Infrastructure Solutions Group (ISG) saw revenue surge 30% YoY in H1, driven by robust demand for AI servers. AI server revenue grew at a high double-digit rate. Lenovo’s proprietary Neptune liquid cooling technology stood out, with Q2 revenue more than doubling YoY. Over 100 patents accumulated in the past decade have strengthened its competitive edge in liquid cooling, enabling energy-efficient, large-scale AI computing deployments. ISG reported an operating loss of $118 million in H1, primarily due to increased strategic investments in R&D and business expansion to capitalize on AI opportunities. Future products are expected to support diverse workloads, including training, fine-tuning, and inference, while accommodating multiple AI chips.

**SSG Delivers Steady Growth with Optimized Profit Structure** The Solutions & Services Group (SSG) achieved a 19% YoY revenue increase in H1, reaching a new record, with an operating margin of 22% and operating profit up 28% YoY. Support services, managed services, and project & solution services all grew steadily, with the latter two accounting for a record 58.9% of total revenue. TruScale orders more than doubled YoY, reflecting the successful adoption of Device-as-a-Service (DaaS) and Infrastructure-as-a-Service (IaaS), in line with the IT industry’s shift from CapEx to OpEx.

CITIC Securities maintained its earnings forecast, projecting Lenovo’s fiscal 2026–2028 revenue at $76.91 billion, $84.38 billion, and $92.35 billion, respectively, with net profits of $1.69 billion, $1.91 billion, and $2.20 billion. The current PE ratios stand at 9x, 8x, and 7x, supporting a reiterated "Buy" rating.