AI PC Forecast and Chipflation Collide: Lenovo Shares Tumble Despite Goldman Upgrade

Lenovo shares drop 12.75% after a 130% YTD surge, as profit-taking and chipflation concerns outweigh Goldman Sachs' bullish price target hike.

The week has given Lenovo investors whiplash. Fresh from a breakout partnership with Nvidia at Computex and a bullish price-target hike from Goldman Sachs, the stock has suffered a sharp reversal — shedding as much as 12.75% on Thursday to slip to EUR 2.43. Earlier in the week shares had already given up 7%, sliding to EUR 2.59, as the sheer velocity of the prior rally prompted profit-taking.

Goldman Sachs raised its price target on the Hong Kong-listed stock to HK$31 and reaffirmed its “Buy” rating, pointing to the accelerating AI hardware cycle as the key catalyst. The US bank now expects Lenovo’s net income for fiscal years 2027 through 2029 to come in 4.3% and 6% ahead of previous estimates, underpinned by an operating margin improvement to 3.8%. Average earnings growth of 25% per annum is projected for fiscal 2027 and 2028.

The three engines driving that optimism are familiar: the infrastructure solutions group (ISG), AI servers and AI PCs. Goldman sees the rollout of new chip platforms from Intel, AMD and Qualcomm fuelling a surge in demand for AI-enabled laptops. Nvidia cemented the theme at the Computex trade show, confirming that Lenovo will ship laptops equipped with its RTX Spark “personal AI computer” superchip from autumn, promising one petaflop of local AI processing. Microsoft also validated the Yoga Pro 9n model with Nvidia’s latest silicon.

Lenovo’s own numbers provide the foundation for the bull case. Fourth-quarter revenue jumped 27% to US$21.6 billion, while adjusted net profit doubled to US$559 million. Annual sales from AI-related products and services grew 84% in the quarter, accounting for 38% of total revenue. ISG posted a record full-year turnover of US$19.2 billion and swung back to profit, with operating earnings improving by US$142 million.

Yet the market is looking past these headline figures. Morgan Stanley recently warned of “chipflation” — memory-chip prices have roughly sextupled over the past twelve months, squeezing margins for hardware assemblers even as suppliers like Micron and Samsung benefit. IDC has sounded a similar note, flagging a possible contraction in the PC and smartphone markets toward the end of 2026. The knock-on effect was visible across the sector: Acer’s shares hit limit-down in Asian trading, losing 10% in a single session.

The technical backdrop only amplifies the caution. After a near-vertical ascent — the stock roughly doubled in the 30 days preceding the peak — the relative strength index had climbed to 75.4, firmly in overbought territory. The 30-day annualised volatility surged past 105%, a measure of how violently sentiment is swinging around the AI infrastructure cycle. The 52-week high of EUR 2.96 was set on 1 June; the current price of EUR 2.43 sits 18% below that mark.

For all the pullback, the longer-term picture remains extraordinary. At the January trough the stock traded at just EUR 0.93. Even after the latest selloff, the year-to-date advance stands at 130%, having been as high as 145% before Thursday’s drop. Over twelve months the gain is 142%.

The real test, analysts argue, will come in execution. ISG must sustain its operational turnaround, and AI PCs have to command premium pricing with higher margins. The Nvidia deal and the next generation of processors provide the raw ingredients. Whether Lenovo can convert those into durable margin expansion will determine whether the next leg of the rally has legs — or whether the correction has further to run.