CICC: Lenovo Group (00992) launched AI Now to maintain “outperforming the industry” rating

The Zhitong Finance App learned that CICC released a research report stating that the profit forecast for Lenovo Group (00992) remains unchanged. The current stock price corresponds to FY25/26 14.1/10.3 times P/E, maintaining the “outperforming industry” rating and target price of HK$12.6, corresponding to FY25/26 16.2/11.8 times P/E. According to reports, on October 15, Lenovo Group held an innovative technology conference with the theme of “Smarter AI for All” in Seattle, USA. During the conference, many artificial intelligence companies such as Nvidia, AMD, and Intel jointly showcased many products and solutions such as AI Now, liquid-cooled servers, and hybrid artificial intelligence advantage sets.

CICC's main views are as follows:

Intelligent AI Now helps the personalized development of PCs, and Intel and AMD are jointly shaping the future of X86.

At this conference, Lenovo released AI Now, a personal intelligence based on Meta Llama 3.1, to the world. AI Now can directly interact with personal knowledge bases in real time locally, enhancing data privacy and personalized user experience. At the same time, it also embeds PC assistants, third-party AI applications, and Microsoft Azure AI content security to further expand platform functions. On the AI PC chip side, the two major chip makers Intel and AMD announced their first cooperation at the conference to jointly form an x86 ecosystem advisory group. Broadcom, Lenovo, Microsoft, HP and other companies joined as founding members to improve compatibility, predictability, and consistency among x86 products. According to IDC data, 3Q24 Lenovo PC shipments increased 3% year on year, higher than the overall industry (-2.4%), and the market share increased to 24%, mainly due to the North American school season and economic recovery, and the increase in demand for entry-level PCs. Looking ahead to the market, the bank believes that Lenovo's continuous expansion of the PC lineup, including AI PCs, has an advantage in market competition, and is expected to benefit from the gentle recovery of PCs, as well as a new wave of rotating switches driven by Win10 and AI PC changes.

The AI server product matrix is getting richer, and next-generation liquid cooling technology helps the green development of data centers.

At this Tech World conference, Lenovo launched a next-generation ThinkSystem server equipped with a Blackwell GPU; in addition to cooperating with Nvidia's AI chips, it also has a solution based on the AMD MI325X. The AMD CEO expects the MI325X to be mass-produced and shipped at the end of 4Q24, and Lenovo is expected to be delivered in 1Q25. In addition, Lenovo officially unveiled the sixth-generation Neptune liquid cooling solution at the conference. Compared with traditional air cooling systems, this solution can reduce electricity consumption by 40%, which is conducive to promoting the sustainable development of data center servers. Looking forward to the future, the bank is optimistic that the company will continue to expand cooperation with various AI chip manufacturers and rely on leading liquid cooling technology to expand its market share in the field of high-performance, low-energy AI servers.

The trend of hybrid artificial intelligence is increasing, and private AI and public AI complement each other.

At the conference, Lenovo announced a partnership with Nvidia to launch Hybrid AI Advantage, a comprehensive hybrid AI advantage set. The advantage set includes the new Lenovo AI Library (a comprehensive repository of artificial intelligence templates), which can help organizations quickly transform AI investment results. Lenovo takes hybrid artificial intelligence as the future direction — seamless and secure integration of private and public clouds, personal and enterprise solutions. As an integrator of artificial intelligence products, Lenovo collaborated with many leading AI companies at this conference to promote a closed loop in the AI industry chain.