Citi has issued a research report stating that it expects Lenovo Group (00992) to once again deliver solid quarterly performance for the second fiscal quarter of the 2026/27 fiscal year ending in late September, and maintains a "Buy" rating on Lenovo Group.
The bank expects the quarterly performance to be primarily supported by continued strength in the ISG business, stable execution in the IDG business, and sustained double-digit expansion in the SSG business. It forecasts second fiscal quarter revenue of US$27.1 billion, representing a 33% year-over-year increase and a 1% quarter-over-quarter increase, broadly in line with market expectations, with non-GAAP net profit of US$1.18 billion, exceeding market expectations by 49%.
Citi noted that recent market concerns about highly leveraged AI infrastructure operators have triggered volatility in the AI supply chain, but Lenovo Group's direct exposure to high-risk new cloud customers remains limited, and combined with sound risk controls and comprehensive accounts receivable insurance, concerns regarding the balance sheet can be mitigated.
The bank expects ISG to remain the primary profit engine, with second fiscal quarter revenue growing 135% year-over-year and operating margin holding steady at 9%.
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