Zoom joins the AI bandwagon and projects a 2024 goal for its stock price.
The company's shares rose 8% in extended trading after Zoom Video Communications announced Monday that it will incorporate more artificial intelligence into its products and predicted an annual profit that exceeded Wall Street expectations.
Experts forecast that AI technology would be a crucial factor in the future expansion of the tech sector, which is currently struggling with sluggish demand and worries about a recession.
Once Microsoft supported OpenAI's ChatGPT last year, the AI arms race accelerated as industry titans like Alphabet Inc. and China's Baidu Inc. announced their own products.
As Microsoft already provides ChatGPT for Teams Premium, RBC analyst Rishi Jaluria stated, "I love that Zoom is actively talking about these potential today and I really feel it's vital." Including as a component.
According to Refinitiv data, San Jose, California-based Zoom projected fiscal 2024 earnings of between $4.11 and $4.18 per share, exceeding the average expectation of $3.66 made by analysts.
During a conference call with investors, CEO Eric Yuan stated that "the age of AI and the large language model has here" and added that AI can "truly benefit" the business.
Also, Zoom is profiting from the ongoing transition to a hybrid work model and the consistent demand for its cost-saving video conferencing service. It announced a 15% employment decrease earlier this month.
Zoom exceeded expectations by earning $1.22 per share on an adjusted basis for the fourth quarter that ended on January 31.
In contrast to analysts' average projection of $1.10 billion, revenue increased by 4% to $1.12 billion.
The expansion, according to finance head Kelly Steckelberg, was mostly fueled by Zoom's enterprise division.
The company projects 2024 revenue to be between $4.44 billion and $4.46 billion, far less than the $4.60 billion consensus forecast on the street.
The revenue prognosis is less favourable than previously anticipated, in part because of macro headwinds and particularly because of the drop in internet sales, according to Jaluria.
