Shares of Lenovo (LNVGY) are up 20% after the Hong Kong-based personal computer maker reported better-than-expected financial results.
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Lenovo said that its revenue for this year’s first quarter reached $21.6 billion, up 27% year-over-year. It was the biggest growth rate at the company in five years. Lenovo’s net income grew six-fold to reach $521 million.
Management attributed the strong financial results to artificial intelligence-related (AI) revenue, which surged 84% in the latest quarter and accounted for more than a third of total revenue. The AI unit includes electronic devices such as personal computers and smartphones that are made by the company.
Lenovo’s income statement. Source: The Fly
Bullish Guidance from Lenovo
Looking ahead, management said that Lenovo aims to become a $100 billion company within the next two years, with most of that growth tied to its AI products. Currently, Lenovo has a market capitalization of $24 billion.
China-based Lenovo is the world’s top personal computer maker, with a global market share of 24.4%. It competes against U.S. computer manufacturers such as Dell Technologies (DELL) and HP (HPQ). Lenovo said it is prioritizing adding AI to its electronic devices, which is driving sales.
Is LNVGY Stock a Buy?
Not enough U.S. analysts offer ratings and price targets on Lenovo’s stock. So instead, let’s compare the stocks of its competitors, Dell and HP. As one can see in the chart below, DELL stock has a consensus Moderate Buy rating while HPQ has a Moderate Sell recommendation. Both stocks carry downside risks after big rallies in recent months.
