Shulou(Shulou.com)12/24 Report--

Since the advent of ChatGpt at the end of last year, the concept of AI has become a weather vane to control the rise and fall of stock prices. Lenovo Group has been widely concerned and optimistic by the market by virtue of its identity and technology, such as the strongest computing infrastructure provider, full-stack intelligent layout, hybrid AI framework, and the clear development strategy of "AI For All".

In the 247 trading days since the end of last year (December 16, 2022 to December 15, 2023), Lenovo's share price has risen nearly 70%, the leading industry, and this month's range is up 12.64%, which is also impressive.

As of press time, Lenovo shares were worth HK $10.24. Since the beginning of this year, many brokerages and investment institutions, including Guosheng Securities, Anxin International, Oriental Securities, Guohai Securities, Everbright Securities and Soochow Securities, have given Lenovo a buy rating, with a target price of around HK $11 per share. Lenovo's share price still has a lot of room to rise.

Among them, Goldman Sachs Research report gave Lenovo a "buy" rating of HK $11.79 based on a target price-to-earnings ratio of 8.9 times earnings per share in 2024.

Goldman Sachs believes that Lenovo is in a good position to enhance artificial intelligence technology, while the report points out that with the upgrade of Windows + Intel and the launch of AI PC in the second half of 2024, Lenovo can maintain the single-digit growth in global PC shipments in 2024, and customer demand for PC improved in the fourth quarter.

Anxin International said in a research newspaper that it maintained Lenovo's "buy" rating with a target price of HK $11.3. The reason given by Anxin International is that Lenovo is the world's leading consumer electronics brand and has shown strong potential in the server business with the development of AI.

At the same time, Anxin International pointed out a number of positive messages for Lenovo Group: the PC market in 2023, 2024 fiscal year is in the stage of bottoming out and rebound, Lenovo Group's diversified business outside PC will consolidate its performance; the previously announced Q2 results of Lenovo Group show the recovery trend of the entire business sector, especially the PC market, superimposed with AI PC increment, which is expected to usher in the replacement wave brought by the first round of AI PC in 2024.

According to the report released by Lyon, the trend of artificial intelligence has pushed the PC market into a recovery cycle, Lenovo is the main beneficiary, and share price adjustment is a good absorption opportunity. The bank upgraded Lenovo to "buy" from "outperform", maintaining its target price of HK $10.9, which is equivalent to 11 times Lenovo's 2025 earnings.

It is not difficult to see that the main factors that stimulate the rise of Lenovo's share price are the benign expectations of the PC market, especially the AI PC market, which brings good news.

On the evening of December 14, Beijing time, at the "AI everywhere" event held in New York, the chip giant Intel officially released its first Intel Core Ultra mobile processor series products based on Intel 4 (corresponding to TSMC 7nm process), Meteor Lake architecture and new AI PC technology, and also said that from now on, more than 230 models such as Lenovo and Asustek will release AI PC products with built-in Core Ultra chips.

Just one day later, on December 15, 2023, Lenovo launched new commercial and consumer notebooks, including the new ThinkPad X1 Carbon, ThinkPad X1 two-in-one, and the new Pro16 2024 and IdeaPad Pro 5i, which are equipped with the latest Intel Core Ultra processor and Windows 11 system, with efficient power management, powerful performance, deep immersive user experience and artificial intelligence acceleration. The advent of AI PC-related products will further increase the certainty of Lenovo's AI-driven performance growth.

Judging from the AIPC market trend, according to the recent AIPC (China) White Paper released by IDC and Lenovo Group, in the next five years, the proportion of new phones assembled by AIPC in China's PC market will grow from 8.1% in 2023 to 85% in 2027, becoming the mainstream of the PC market. This means that the installed capacity of AI PC will increase more than 10 times in 5 years.

In addition to the related concepts of AI PC, Lenovo's diversification engine also continues to develop. According to Lenovo's recent financial report, in the second quarter of 23 pct; 24, businesses other than personal computers accounted for more than 40% of the group's total turnover, up 3% from the same period last year. Revenue from the storage business ranked third in the world, and revenue from both the service business and marginal business reached record highs. SSG Solutions Services Business Group's annual income and operating profit in the first half of the financial year rose 14% and 7% respectively compared with the same period last year, leading Lenovo's service-led transformation.

Perspective Lenovo Group, not only under the "AI for All" vision, has set up intelligent terminals embedded in AI, AI-oriented and optimized infrastructure and AI native solution services, which has unique advantages in the AI wave, but also brings upward expectations to the market in terms of business structure adjustment. Taken together, the rise in Lenovo's share price may not be over yet. After Lenovo said it would spend another $1 billion on artificial intelligence-driven innovation over the next three years, Lenovo's share price is expected to rise higher.

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