---
title: "Citi: ZTE  2Q Revenue Beats on AI Computing Power Demand, but GPM Misses on Product Mix Drag"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/296753005.md"
description: "Citi reports ZTE's Q2 revenue beat expectations by 7% due to AI computing demand, but gross margin missed forecasts as lower-margin hardware shifted the product mix. Consequently, net profit fell 45% YoY and operating profit dropped 58%. Citi lowered 2026/2027 profit forecasts by ~19%/14.5% but raised revenue forecasts slightly. The target price was increased to HKD25.9 from HKD25.4, maintaining a Neutral rating."
datetime: "2026-08-24T07:56:43.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/296753005.md)
  - [en](https://longbridge.com/en/news/296753005.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/296753005.md)
generator: "portal-rs"
---

# Citi: ZTE  2Q Revenue Beats on AI Computing Power Demand, but GPM Misses on Product Mix Drag

Citi issued a report saying that ZTE (00763.HK) -0.580 (-2.431%) Short selling $19.19M; Ratio 11.826% 's 2Q revenue rose 12% YoY to RMB43.037 billion, 7% above market expectations, while net profit fell 45% to RMB1.442 billion, 2% above market expectations. Revenue beat expectations, benefiting from growth in computing power and AI infrastructure businesses, which offset the impact from continued declines in domestic operator capital expenditure. However, gross margin narrowed sharply to 23.2% (down 7.7 ppts YoY and 5.1 ppts below the broker's forecast), as the revenue mix shifted toward lower-margin computing power and server hardware products, dragging operating profit down 58% YoY, far below the broker's expectation by 58%.

The broker lowered its 2026 and 2027 net profit forecasts by 19.4% and 14.5%, respectively, due to the shift in revenue mix toward lower-margin products, while the 2028 forecast remained broadly unchanged. Revenue forecasts were raised by 2.6% to 3% to reflect strong computing power demand. TP was lifted from HKD25.4 to HKD25.9 based on a target P/E ratio of 15x, while the valuation base was rolled forward from 2026 to 2027. The Neutral rating was maintained. (ad/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-24 12:25.)

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> **Disclaimer: This article is for reference only and does not constitute any investment advice.**