Goldman Sachs: Raised LENOVO GROUP (00992) target price to 27 Hong Kong dollars, rating "buy"

Goldman Sachs released a research report stating that LENOVO GROUP (00992) had a strong performance in the quarter ending in March, confirming the firm's positive view that the impact of rising memory costs is manageable. As a global leader in PCs, LENOVO GROUP has strong bargaining power with customers and suppliers, and is benefiting from market share expansion and rising average selling prices. In the previous quarter, Lenovo's PC shipments increased by 8.6% year-on-year, outperforming the global growth rate of 2.5%, and its global PC market share expanded to 25.2%. Goldman Sachs expects that AI will continue to drive Lenovo's future growth, and has raised its earnings forecasts for the years 2027 to 2029 by 5%, 6%, and 5% respectively, with a target price raised significantly from HK$12.53 to HK$27, and a rating of "Buy". The report mentioned that Lenovo is continuously expanding in the AI server field, with the average selling price of servers above $250,000 increasing significantly from approximately $576,000 in the second quarter of last year to $1.4 million in the last quarter, reflecting the group's transition to high-end AI training servers. The group currently has a capacity of 11,000 liquid-cooled AI server racks per year and plans to start delivering the next generation RubinAI server racks in the second half of the 2026 fiscal year. In the storage business, Lenovo completed the acquisition of Infinidat in April 2026, further enhancing its position in the high-end enterprise storage market. Goldman Sachs predicts that Lenovo's storage revenue will achieve a compound annual growth rate of 25% between the 2026 and 2028 fiscal years. The firm forecasts that by 2028, the ISG business will account for 35% of total revenue, up from 23% in 2025. Goldman Sachs has raised its market share forecasts for Lenovo's server and storage businesses, expecting global market shares of 8% for servers and 9% for storage by 2028. While the gross margin for the fiscal years 2028 to 2029 is expected to be slightly pressured due to competition in consumer electronics and a shift to high-end models (incurring expensive GPU costs), overall operational efficiency improvements will offset some of the impact.