“The intelligent devices group, which sells PC and smartphones and is the biggest source of revenue, is poised to be the main drag due to sluggish consumer demand and ongoing inventory digestion,” Bloomberg Intelligence analyst Steven Tseng wrote in a memo before results were released.
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Is China’s technology falling behind in the race for its own ChatGPT?
Uncertainties in the timing of a recovery in demand for PCs and storage gear could further cloud Lenovo’s business prospects, Goldman Sachs analysts Verena Jeng and Allen Chang wrote in a note ahead of the earnings release. Fiercer-than-expected competition in smartphones and AI servers could also weigh on the company.
On the bright side, a demand surge for AI servers could kick-start another round of growth for Lenovo. The Beijing-based company introduced a server brand tailored for the Chinese market, where a slew of local companies from Baidu to SenseTime Group are developing ChatGPT-like AI services. The company sees the rapid development of AI applications generating numerous new opportunities, it said in its statement.
“AI’s higher requirements of computing power and new AI functions will support demand for Lenovo’s end devices,” the Goldman analysts said. “In the overseas market, Lenovo is well positioned with global leading clients and for overall servers business. We expect Lenovo to grow on market share gain, product mix upgrade and product lines expansion.”