On May 22nd, following a joint launch with Microsoft and Qualcomm of AI PCs, Lenovo Group's stock price surged. As of the reporter's deadline, Lenovo Group's stock price rose by over 13% to 11.6 Hong Kong dollars, setting a new historical high in recent years, with a market value of 141.9 billion Hong Kong dollars. Lenovo Holdings' stock price increased by over 10% to 6.8 Hong Kong dollars.

Today, another company that released an AI PC, ASUSTeK Computer (2357.TW), saw a significant intraday increase of nearly 7% to 523 New Taiwan dollars, setting a new historical high for its stock price, with a market value of 387.7 billion New Taiwan dollars.

In terms of news, Morgan Stanley released a report early today stating that the increase in AI PC sales would benefit the supply chain, raising the target price for Lenovo Group by 64.8%, from 9.1 Hong Kong dollars to 15 Hong Kong dollars, and upgrading the rating from in line with the market to overweight.

Morgan Stanley concluded that the growth of AI PCs and AI servers would support the re-rating of Lenovo Group's stock. The report预计 that the penetration rate of AI PCs in laptops will increase from about 2% this year to around 85% by 2028, which will help to drive the increase in unit profit margins for PC OEMs. It is expected that Lenovo Group's AI PC revenue will rise from about 2% in the fiscal year 2024 to about 53% in the fiscal year 2028, which is the highest proportion among global PC OEMs, and the supply chain will also benefit.

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Furthermore, in the fiscal year 2023, Lenovo Group primarily launched the L40S series of servers. The order volume for H100/H200 AI servers is continuously increasing, and it is expected that the contribution of these AI servers will become more significant in the second half of the fiscal year 2024. In the next few quarters, the order scale is expected to reach about 1.5-2 billion US dollars. This means that, based solely on the additional orders for AI servers, Lenovo Group's ISG (Infrastructure Solutions Group) revenue in the fiscal year 2025 will grow by at least about 20%.

A day earlier, Microsoft just released its Windows 11 AI PC at its new headquarters in the United States, claiming to reconstruct the entire PC form factor. Its built-in AI assistant, Copilot, uses the GPT-4o model that OpenAI just launched last week, and it has launched a series of brand new Windows 11 AI PCs in cooperation with manufacturers such as Lenovo, Dell, Acer, ASUS, and HP. Among them, Lenovo Group launched the first next-generation Copilot+PC equipped with Qualcomm Snapdragon XElite—Lenovo Yoga Slim 7x and Lenovo ThinkPad T14s Gen 6. The starting prices of the two products are $1,199 and $1,699, respectively, and they will be available for sale starting in June 2024.

At present, as the PC industry is at the end of destocking and returning to a growth trajectory, the overall driving effect of AI PCs on the PC industry is particularly important. Yesterday, Luca Rossi, Executive Vice President of Lenovo Group and President of the Intelligent Devices Group (IDG), stated, "With the advent of the AI PC era, this is a once-in-30-years turning point for the industry." Previously, Yang Yuanqing, Chairman of Lenovo Group, revealed in an interview with First Financial Daily that, with the boost of AI, the new fiscal year will continue to maintain revenue growth and has the opportunity to achieve growth in profits and improvement in profit margins.

Currently, there is no unified definition for AI PCs in the industry. Some people believe that as long as there is an NPU (Neural Processing Unit), it is an AI PC, and some believe it is the ability to use cloud-based large models, etc. Yang Yuanqing, Chairman of Lenovo Group, previously stated in an interview with First Financial Daily that an AI PC should have five major characteristics: running AI agents that have been compressed and optimized for performance and interact naturally with users; having stronger computing power, supporting local heterogeneous computing that combines CPUs, GPUs, and NPUs; accommodating more personal lifecycle data and forming a personal knowledge base; an open artificial intelligence application ecosystem; and protecting personal data and privacy security.

The latest research report from Canalys points out that in 2024, the proportion of AI PCs in PCs shipped will be close to one-fifth (20%). By 2027, thanks to the momentum of replacement and new local experiences, this proportion will rapidly grow to over 60% and will be widely applied in the commercial field.

A Lenovo executive recently revealed to a First Financial Daily reporter that it is expected that by the end of this year, about 10% of the world's computers will be AI PCs, and this proportion will be even higher in the Chinese market.However, from a market perspective, the current AI PCs have high costs at the chip computing level and significant investments in software ecosystems, making their starting price of thousands of dollars relatively high compared to ordinary computers. PC manufacturers still need to work hard in areas such as technological innovation, cost control, ecosystem construction, and user education. At the same time, considering the high performance and unique AI functions provided by these products, industry insiders predict that they may attract professional users or enterprises seeking the latest technology and high efficiency to take the lead in paying. Morgan Stanley estimates that AI PCs will start to become popular from laptops priced above $1000 and eventually expand to the price range of $500.

In addition, for many PC industry chain manufacturers, AI PCs are just the first step. How artificial intelligence reaches and penetrates various industries means a broader market space. Not long ago, Yang Yuanqing said in an interview with journalists that Lenovo's non-PC revenue accounts for more than 40%. It's not just about PCs, artificial intelligence will also reshape all of Lenovo's businesses. From smart devices to infrastructure, and then to solutions and services, Lenovo hopes to find more market opportunities for AI applications.