Chinese PC company Lenovo is believed to have benefitted from ‘better than expected PC sales’ claims analysts with the Companies Motorola smartphones also surging in demand.
The big question for the board is how will US tariffs on China impact the Company who are the world’s #1 PC brand, with the possibility that popular notebook brands sold in Australia could rise significantly in the future due to the tariffs and a weak Australian dollar coupled with rising logistic costs.
Questions are also being asked as to whether Lenovo will build the Chinese developed DeepSeek AI offering into their PCs alongside Microsoft’s Copilot and Googles Gemini.
Lenovo Idea Tab Pro
Kay Hian a UOB analyst based in Singapore claims that Lenovo Group’s fiscal 3Q results look ‘solid’ she claims that U.S. tariffs remain a risk, however she does point out that all PC players will be affected, as most brands still heavily rely on assembly capacity in China.
Analysts estimate that Lenovo could face a 10%-15% impact on its bottom line for every additional 10% tariff on Chinese goods.
“Nevertheless, if every player ends up being impacted, it is likely that the costs will be transferred to the customers, and could cause a slight impact to PC shipment,” they say.
Some analysts are questioning whether Chinese brands spanning PCs, smartphones and appliances will be forced to build DeepSeek, which has already been banned in some countries including being installed on Government devices in Australia to install the low cost Chinese AI software onto devices.
UOB analysts Johnny Yum and Colin Lee claim that Lenovo Group could be a key beneficiary of DeepSeek’s breakthrough, claiming that the cheaper and more accessible AI features introduced by DeepSeek could encourage more enterprises, especially small- and mid-sized ones, to start investing in AI equipment.
This could accelerate replacement demand for both PCs and servers, the analysts claim.
Lenovo recently incorporated DeepSeek’s AI model into its in-house AI assistant and is reportedly having more collaboration with the AI startup.
UOB maintains a buy call on Lenovo and raises its target price.
The stock is HK$12.62 haven risen almost 29% during the past 12 months.
