Zoom jumps on AI bandwagon, forecasts upbeat 2024 profit targets
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Zoom Video Communications said it will integrate more artificial intelligence into its products.
PHOTO: REUTERS
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Bengaluru – Zoom Video Communications said on Monday it would integrate more artificial intelligence (AI) into its products and forecast annual profit above Wall Street estimates, sending the company’s shares up 8 per cent in extended trading.
Analysts predict that AI tech will be a major driver for future growth for the tech industry, which has been grappling with slowing demand amid recessionary fears.
The AI race picked up pace after Microsoft-backed OpenAI’s ChatGPT China’s Baidu
“I like that Zoom is proactively talking about these opportunities today and I honestly believe it is necessary, especially given that Microsoft is already including ChatGPT as part of Teams Premium,” said RBC analyst Rishi Jaluria, referring to the new premium tier of Microsoft’s business communication platform.
Zoom forecast a profit of between US$4.11 and US$4.18 per share for fiscal year 2024, compared with analysts’ average estimate of US$3.66 per share, according to Refinitiv data.
“The age of AI and large language models has arrived,” said Zoom chief executive Eric Yuan during a call with analysts, adding that AI can “truly help” the company.
Zoom is also benefiting from steady demand for its videoconferencing service due to the ongoing shift to hybrid work models and cost cuts. Earlier this month, Zoom cut 15 per cent of its workforce, slashing jobs more aggressively than most of its technology peers.
On an adjusted basis, Zoom earned US$1.22 per share for the fourth quarter ended Jan 31, compared with estimates of 81 US cents per share.
Revenue grew 4 per cent to US$1.12 billion, above analysts’ average expectation of US$1.10 billion.
Finance chief Kelly Steckelberg said the growth was primarily driven by strength in Zoom’s enterprise business.
The company, however, expects revenue of between US$4.44 billion and US$4.46 billion for 2024, below average Wall Street estimates of US$4.60 billion.
“The revenue outlook is softer than initially expected, partly due to macro pressures and especially given declining online business,” Mr Jaluria said. REUTERS
