Lenovo's AI Business Is Thriving, And The Stock May Still Be Too Cheap

Lenovo is rapidly transitioning from a PC-centric company to an AI infrastructure and services growth story. ISG's operating profit turnaround and a $54B AI server pipeline underpin my Buy rating at $96, with FY2028 as the key horizon. Profit growth is driven by higher-margin ISG and SSG segments, with services expansion offering potential for multiple revaluations. I see operational cash flow recovery and sustained ISG margins as critical for Lenovo to justify a higher earnings multiple by FY2028.

Lenovo ( LNVGY ) is still often viewed as a PC company, but now this is starting to change rapidly. Traditional PC operations remain the largest part of its business, but the strongest profit growth now comes from AI