Lenovo Group stock soars after earnings as C&H points key target

Lenovo Group stock price went parabolic today, reaching its highest point on record as its artificial intelligence business fueled its growth momentum. It jumped to $15.72 in Hong Kong, up by 85% from its lowest point this year, making it the best gainer in the Hang Seng Index this year.

Lenovo Group revenue surges amid AI growth 

Lenovo, a top player in the computer and server business, continued firing on all cylinders as demand jumped. Its financial results showed that its business continues to boom, helped by the ongoing artificial intelligence boom. 

Lenovo said that its revenue jumped by 27% in the fourth quarter to $21.6 billion. This growth translated to a net income of $521 million, up by 479% YoY. Most notably, its AI related revenue continued rising and now accounts for 38% of its total revenue. 

Lenovo’s Intelligent Devices Group’s (IDG) jymped by 24% to $14.6 billion. Its PC business experienced a 5.6 point shipment growth, while its smartphone segment experienced a surge in shipments. 

Meanwhile, Lenovo’s Infrastructure Solutions Group (ISG) business experienced a 37% revenue growth, with the operating profit jumping to $202 million. This is an important business segment that helps AI hyperscalers in their infrastructure projects. It now has an AI server pipeline of $21 billion.

Lenovo Solutions and Services Group (SSG) has now achieved a milestone of 20 consecutive quarters of double-digit growth. It made over $2.6 billion in revenue, representing 19% annual growth rate.

For the year, Lenovo Group made over $83.1 billion in revenue and a net profit of $2.04 billion, a 42% annual surge. Its three businesses, IDG, ISG, and SSG recorded a double-digit growth.

The management believes that the business has more room to grow, helped by the ongoing PC refresh cycle. Also, the company has benefited from the robust AI investment in the US, China, and other markets. 

Indeed, most of its top competitors have also published strong financial results this year. For example, Dell Technologies' stock price jumped to $252, up by 130% from its lowest point in January. HP Inc. has jumped by 25% from the year-to-date low, while HP Enterprise has rocketed by 70%.

Lenovo’s growth will come from both global hyperscalers and smaller technology companies that are investing in the data center industry. In all, these companies are expected to spend over $1 trillion this year.

Lenovo stock price technical analysis

Lenovo Group stock chart | Source: TradingView

Technical analysis suggests that the Lenovo share price has surged in the past few months. This surge accelerated today after the company published its financial results.

A look at its chart shows that the stock formed a cup-and-handle pattern whose upper side is at $12.92 and lower side is at $8.53. This gives it a depth of about 33%. Measuring the same distance from the cup’s upper side at $12.92 gives it a target of $17.20. This means that it has some more upside to go in the near term.