Lenovo Group announced its 2QFY26 results, reporting revenue of $20.45 billion, up 14.6% year-on-year. Non-HKFRS net profit reached $512 million, a 25.2% increase, while attributable net profit declined 5.1% to $340 million, impacted by non-cash fair value gains of $148 million related to warrants and nominal interest of $28.47 million on convertible bonds. Shenwan Hongyuan's Huang Zhonghuang team noted that overall revenue exceeded expectations, with net profit significantly surpassing forecasts.
The Intelligent Devices Group (IDG) delivered strong PC performance, with AI PC adoption accelerating. IDG revenue rose 11.79% YoY to $15.11 billion. PC revenue, estimated at $11.1 billion based on IDC data, grew 17.58% YoY, far outpacing the global PC shipment growth of 10.32% in 25Q3. AI PCs accounted for 33% of Lenovo’s global PC shipments, while domestic AI PC penetration reached 30% of notebook shipments, up 3 percentage points quarter-on-quarter. The PC market remains robust, with Lenovo maintaining industry leadership.
The Infrastructure Solutions Group (ISG) posted a 23.65% YoY revenue increase to $4.09 billion, driven by high double-digit growth in AI servers and strong order backlogs. Revenue from Neptune liquid cooling technology surged 154% YoY. ISG’s operating loss narrowed significantly by $53.49 million QoQ to $32.04 million, reflecting progress in AI server transformation. Shenwan Hongyuan expects ISG to turn profitable, supported by economies of scale and a global supply chain.
Gross margin improved slightly to 15.39%, up 0.66 percentage points QoQ, signaling successful AI server transition. Lenovo’s established supply chain and procurement scale position it well to manage memory price hikes effectively.
Maintaining its "Buy" rating, Shenwan Hongyuan forecasts FY25/26-FY27/28 revenue of $79.49 billion, $91.55 billion, and $105.24 billion, with attributable net profit of $1.67 billion, $2.03 billion, and $2.43 billion. The outlook reflects Lenovo’s PC leadership, AI PC momentum, and strong AI server growth amid the AI trend.