The tech group’s stock has nearly quadrupled this year as surging AI infrastructure demand and improving margins drive a sharp rise in profitability.
Shares of Lenovo Group (0992.HK) hit a record high on Sept. 18, as growing AI infrastructure sales and rapidly improving margins fuel the technology company’s rally.
The stock rose as high as HK$36.90 ($4.70) during morning trading in Hong Kong, surpassing both its 52-week and previous all-time highs. It closed the morning session at HK$36.88, up 7.46% from the previous day, giving the company a market capitalization of HK$457.9 billion.
Based on an adjusted price of HK$9.14 at the start of the year, the stock had gained about 275% by the Sept. 17 close. At its intraday price of HK$36.54 on Sept. 18, the gain had reached about 300%.
AI infrastructure powers growth
The rally comes amid a broader retreat in Hong Kong technology stocks. Since the beginning of September, the Hang Seng Index has fallen 3.13%, while the Hang Seng Tech Index is down 6.69%.
Lenovo has bucked that trend as demand for its AI infrastructure products continues to scale up and its business margins improve rapidly.
For the first quarter of fiscal 2026/27, ended June 30, Lenovo reported revenue of $26.94 billion, up 43.1% year on year. Adjusted net profit attributable to shareholders rose 176% to $1.08 billion, lifting the adjusted net margin to 4.0%.
Its Infrastructure Solutions Group generated revenue of $8.51 billion, up 98.4%. Operating margin rose to 9.1%, 5.5 percentage points up from the previous quarter. Its backlog of AI server orders reached $54 billion, up 157% quarter on quarter.
IDC data showed Lenovo’s x86 server shipments ranked first globally for the first time in the second quarter of 2026. Shipments rose 45.6% year on year, giving Lenovo a 7.4% market share, up 1.9 percentage points from a year earlier.
The company’s Intelligent Devices Group and Solutions and Services Group also posted solid growth. IDG revenue rose 27% to $17.1 billion, with an operating margin of 7.1%. SSG revenue increased 28% to $2.88 billion, while its operating margin reached 24.2%.
Lenovo sees further AI upside
At an AI investment summit hosted by Sina Finance on Sept. 16, Lenovo Senior Vice President and CFO Winston Cheng said the company’s current valuation was only about one-seventh that of Dell, despite the two companies not being seven times apart in terms of revenue or net profit.
From that perspective, Cheng said, Lenovo’s value was significantly underestimated.
He said demand for AI infrastructure remained in a relatively long upcycle, while corporate AI applications were still at an early stage of investment. Lenovo’s overseas expansion was only beginning, while the gradual release of demand for enterprise AI inference and the development of edge AI would become important areas of focus, he said.
Analysts remain bullish, but targets vary
Analyst sentiment toward Lenovo is bullish. According to an incomplete tally by IPO Early Insight, of the 26 institutions covering the company on a rolling 100-day basis as of Sept.18, 22 rated the stock “buy,” three rated it “overweight” and one rated it “neutral”. None had a “reduce” or “sell” rating.
Price targets, however, vary considerably. Morgan Stanley initiated coverage on Lenovo with an “overweight” rating on Sept. 17 and target of HK$46, while JPMorgan also rated it “overweight” the same day with a HK$50 target. Citi set a HK$50 target on Aug. 31, while Macquarie maintained an “outperform” rating on Sept. 8 with a HK$66 target.
Source:
IPO Early Insight
