Goldman Sachs reviews Lenovo's Q2 performance: supply chain shows strong bargaining power, maintains "buy" rating.

On November 20, LENOVO GROUP announced its performance for the second quarter of the 2025/26 fiscal year ending on September 30, 2025: quarterly revenue increased by 15% year-on-year to 146.4 billion RMB, reaching a new high for the quarter and significantly exceeding market expectations; adjusted net profit increased by 25% year-on-year to 3.66 billion RMB, with net profit growth far outpacing revenue growth, demonstrating the group's operational resilience and strategic certainty in a complex environment. In response to this, the international top-tier bank Goldman Sachs released a review stating that they maintained a "buy" rating for Lenovo, with a 12-month target price of 13.62 Hong Kong dollars, based on the 2026 (calendar year) expected earnings per share (EPS) under non-Hong Kong Financial Reporting Standards (HKFRS), corresponding to a target price-to-earnings ratio (P/E) of 11.9 times. Goldman Sachs pointed out in their research report that the third quarter revenue and gross margin were basically in line with expectations, driving a 13% increase in gross margin compared to the previous quarter, exceeding Goldman Sachs/Bloomberg's consensus expectations by 6%/1% respectively. Despite the increase in storage chip costs, the gross margin remained stable at 15.4% (15.7% in the third quarter of 2024), reflecting Lenovo's strong bargaining power in the supply chain, excellent management efficiency, and the support of product structure upgrades on gross margin. The adjusted operating expense ratio remained stable at 11.7% (11.8% in the third quarter of 2024), driving a 20% increase in adjusted operating profit compared to our expectations. In terms of specific business segments: Intelligent Devices Group: Revenue increased by 12% compared to the previous quarter, accounting for 74% of total revenue; despite the increase in storage chip costs, the operating profit margin remained stable at 7.3% (7.3% in the third quarter of 2024). In the third quarter of 2025 (calendar year), Lenovo's global personal computer shipment market share further increased to 26%, a year-on-year increase of 17% (global market year-on-year growth of 9%); the penetration rate of artificial intelligence personal computers reached 33%, with a global shipment market share of 31% in the Windows system artificial intelligence personal computer field. The strong performance confirms our positive view on Lenovo's leading market position, and also reflects the company's continuous expansion of market share in the context of industry consolidation and the rise of artificial intelligence personal computers. In an environment of rising storage chip costs, Lenovo's strong supply chain bargaining power and product structure upgrades effectively supported its profit margin levels. Infrastructure Solutions Group: Revenue decreased by 5% compared to the previous quarter, accounting for 20% of total revenue; the operating profit margin improved to -0.8% (compared to -1.1% in the third quarter of 2024). Despite the decline in revenue compared to the previous quarter, year-on-year growth remained solid at 24% driven by the following factors: (1) the widespread adoption of artificial intelligence applications driving high double-digit revenue growth for artificial intelligence servers; (2) new Cloud Service Provider (CSP) customers; (3) continued transformation of enterprise and small and medium-sized businesses (SMBs). The improvement in profit margin reflects the continuous improvement in operational efficiency as the scale of artificial intelligence servers expands. Solution Services Group: Revenue increased by 13% compared to the previous quarter, accounting for 12% of total revenue; the operating profit margin improved to 22.3% (20.4% in the third quarter of 2024). The solid double-digit revenue growth of the service business is supported by the increase in adoption rate of high-end value-added services and the stable penetration rate. The revenue growth of the management services and project solution services business momentum exceeds that of the support services business.