Lenovo shares doubled in May

Lenovo shares on the Hong Kong stock exchange rose 105% in May - this is the largest monthly increase since 1999, writes Bloomberg. Today alone, the stock added 22% after the report was released. The company's market capitalization reached almost HK$298 billion (about $38 billion).

What's in the report

AI-related revenue helped offset pressure from rising component costs. For the quarter ended in March, Lenovo's revenue rose 27% to $21.6 billion, its best in five years. For the entire fiscal year, which ended in March, profit grew by 38% and revenue by 20%, both figures exceeding analysts' forecasts.

Revenue from AI products and services grew by 84% and accounted for 38% of the total. Despite the memory shortage, the company managed to maintain gross margins, which reinforces the thesis that the company is better positioned compared to smaller competitors. The order portfolio for AI servers has reached $21 billion; in the second half of the year, Lenovo will begin shipping systems based on the Nvidia Rubin platform. Goldman Sachs more than doubled its target price for the stock after last week 's report.

Dell effect

Yesterday, the American Dell reported revenue of $43.8 billion for the first quarter (+88% year-on-year). Revenue from AI servers amounted to $16.1 billion, which means an increase of 8.5 times. The annual forecast for this area has been raised from $50 billion to $60 billion. Dell shares are growing by 32%.

According to Bloomberg Intelligence analyst Steven Tseng, Dell's strong results created a spillover effect to Lenovo: it became clear that demand for AI servers was spreading from large cloud providers to enterprise customers, which was equally beneficial for both companies.