In early 2024, famous IT companies around the world showed remarkable growth in the fields of artificial intelligence, cloud, and online services. In particular, NVIDIA and Microsoft greatly increased their profits in artificial intelligence and cloud businesses, exceeding market expectations. Apple's service business also made steady money and grew rapidly in its earnings announcement. This can be seen as a positive signal that the technology industry still has great potential to innovate and grow.
However, some global IT companies have not performed well due to economic instability and parts supply issues. For example, Tesla and Meta have suffered from declining sales and difficulties in the market, and Cloudflare has increased investment but has ended up recording a deficit. This shows that the technology market is highly volatile and competitive, and some companies are struggling financially.
Many IT companies are increasing their capital expenditures (Capex is increasing), which means they are focusing on long-term growth and competitiveness. In particular, it is estimated that there is a great need to expand and upgrade infrastructure, such as cloud computing, data centers, and advanced factories for semiconductor and hardware production. In particular, competition to purchase high-performance chipsets is also intensifying.
By investing heavily in the latest facilities and equipment, companies seem to be planning to improve operational efficiency and better position themselves to utilize new technologies such as artificial intelligence and 5G. This trend shows that IT companies are preparing for the future to stay ahead in fierce competition despite the immediate financial burden. This can be said to be a bold move that prioritizes sustainable growth over short-term profits. Personally, among them, only Brother Jen Seung-hwang was excited.
Earning Call Shortcut
Microsoft is making money with AI
Microsoft has been a force in AI tools like GitHub Copilot, a service that helps with coding, which added 500,000 users compared to the previous quarter. Making AI software available through Microsoft’s cloud Azure has also contributed to the increase in revenue. Microsoft’s $13 billion investment in OpenAI is paying off, as many companies are choosing Azure for their AI projects.
Google's Monetization Plans Still Unclear
Google CEO Sundar Pichai has talked about many AI use cases, but he hasn’t mentioned specific revenue plans. Google recently launched Gemini Advanced, a premium AI chatbot service that costs $20 per month, but the number of subscribers hasn’t been disclosed. It’s even more exciting to hear that Google is also experimenting with summarizing search results using AI.
The investment market is currently positive about both Microsoft and Alphabet. Their stocks have risen significantly, and they expect their AI strategies to make them big money in the future. However, while Microsoft is already profitable, Google has yet to show any significant results.
In Korea?
First, in the case of the cloud business, sales reached 117 billion won, up 25.5% year-on-year. Growth was driven by Neurocloud orders, generative AI sales, and the expansion of Lineworks paid IDs. In particular, we are continuing to expand our business by completing agreements with various companies, including the Bank of Korea and HD Hyundai, to introduce HyperclovaX.
The search platform division grew 6.3% year-on-year, thanks to improved exposure of search materials and advanced search using AI technology. It accounts for 31% of total sales and maintains high profitability.
However, the content division saw a slight decrease in sales compared to the previous quarter due to the exclusion of Naver Jet. However, the webtoon business is continuing its solid growth, with global transaction volume growing 9.1% year-on-year.
In summary, Naver is achieving visible results in the AI and cloud sectors, and its main businesses such as search advertising are also maintaining high levels of profitability. However, the content sector is somewhat sluggish due to the exclusion of subsidiary consolidation.
Microsoft and Google's performance in the AI field is small compared to others, but it can be evaluated positively in that it is leading the domestic AI and cloud market. It is expected to continue to grow by expanding AI solutions such as HyperclovaX and strengthening cloud business capabilities.
Select Star, Deep Brain, etc. are making sales through AI data preprocessing and serving, and Upstage also achieved sales of 4.6 billion through LLMSI and education service provision. I hope that many companies making money through AI will emerge in Korea as well. I am also curious about Kakao's performance, and Kakao will be released on May 8, so I will add more information in the comments as soon as it is released.
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