JP Morgan has released a research report highlighting that LENOVO GROUP (00992) is expected to benefit from improved server profitability, with the ISG business projected to become a core profit engine in the medium term. The IDG business is also anticipated to outperform market expectations in terms of profitability. The bank believes LENOVO GROUP can leverage its superior supply chain management capabilities and scale advantages to consistently outperform peers. As a result, the adjusted net profit forecasts for fiscal years 2026 to 2028 have been raised by 63%, 51%, and 40%, respectively. The valuation basis has been upgraded from a 16 times to an 18 times forward 12-month price-to-earnings ratio, with the target price significantly increased by 66.7% from HK$30 to HK$50. The rating remains "Overweight."

LENOVO GROUP's first-quarter profit for the fiscal year ending June 2027 far exceeded JP Morgan's expectations, driven by surprises in the PC, server, and SSG business segments. During the period, demand for AI servers remained strong, with backlog orders doubling quarter-on-quarter to US$54 billion. The IDG business maintained resilient profit margins, while the SSG business saw accelerated growth and improved profit margins.