What’s new: Shares of Chinese artificial intelligence (AI) specialist iFlytek Co. Ltd. (002230.SZ) climbed 10% on the first day of trading after the weeklong holiday as chatbot ChatGPT reignited investor interest in the space despite the company’s recent profit warning.
iFlytek’s stock rose to the daily limit to 41.67 yuan ($6.17) a share in Shenzhen on Monday, a day after it disclosed in an exchange filing that its 2022 profit suffered a 60% to 70% drop.
The company’s full-year net profit fell to somewhere between 466.9 million yuan to 622.6 million yuan, according to the Sunday exchange filing.
Total revenue grew less than 10% in 2022, lower than a 40.6% rise the previous year, the company estimated, partly due to Covid-19 disruptions as 3 billion yuan in contracts were delayed in the fourth quarter.
iFlytek said last year’s investments on new products and technologies in areas like education and health care have yet to generate revenue, limiting potential profit growth.
The context: As ChatGPT has spurred global discussions on the potential of AI, investors and analysts are looking for trading opportunities in Chinese companies that could benefit from technologies similar to ChatGPT. On Monday, an index compiled by financial information provider iFinD that tracks Chinese onshore AI stocks rose 2.64%, beating the 0.14% increase in the benchmark Shanghai Composite Index.
iFlytek’s business could rebound this year as its technology investments begin to pay off and the economic fallout from Covid-19 abates, analysts at Guosheng Securities Co. Ltd. wrote in a note on Monday.
Related: iFlyTek Hopes to Cash in on Pandemic Driven Demand for AI Services and Devices
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
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