HSBC maintains Lenovo's “buy” rating: PC business stabilizes with a potential increase of 18% in the target price of HK$12.9

Recently, HSBC, an internationally renowned bank, expressed the opinion that Lenovo PC is still a cash cow business, and the server business is also in the continuous investment stage, so it maintains a “purchase rating”. The target price is HK$12.9, with a potential increase of 18%.

According to HSBC, Lenovo is showing strong momentum in both consumer-grade and commercial-grade PC segments:

Consumer PCs: The company's share in multiple markets continues to grow, and gaming PCs are in high demand (particularly in China). As the activation rate of Lenovo PC products remains steady, channel inventory is currently at a healthy level.

Commercial-grade PCs: Lenovo's management is optimistic about the business-PC refresh cycle. According to management's judgment, there are still about 250 million devices running Windows 10 in the global market, and this part of the device is expected to become the core growth driver for the PC update cycle in the future. The renewal of commercial PCs will continue to support gross margin growth in the Smart Device Group (IDG) business until fiscal year 2026 (FY26).

In terms of the impact of tariffs, Lenovo has transferred PC product production capacity sold to the US market to Vietnam, so the impact of tariffs on its PC business is limited. Despite the uncertainty of tariff policies, with a global production layout, Lenovo is more flexible to respond to changes in market dynamics.

The ISG business, on the other hand, is in a stage of continuous investment. Strategic investment in the SME sector is increasing, and investment in strengthening AI server capabilities is also increasing to achieve better operational leverage effects.