IFlytek, a Chinese tech company specializing in natural-language processing and artificial-intelligence technologies, saw its shares surge on Tuesday despite forecasting a steep drop in first-half profits. Investors chose to focus on the company’s sequential earnings improvement.
The stock gained as much as 5.8% and was recently trading 4.7% higher at 68.98 yuan ($9.54).
In its earnings guidance for the first half of the year, iFlytek stated that it expects a net profit decline of 71%-80% compared to the previous year. The company attributed this decrease to the negative impact of the pandemic on revenue and performance, as well as limited access to components due to U.S. export restrictions.
However, some analysts remain optimistic about iFlytek’s future.
Analysts from Guosheng Securities highlighted that the company’s second-quarter top-line guidance exceeded expectations, indicating a sequential recovery. According to iFlytek’s filing, it expects second-quarter revenue to rise approximately 10% compared to last year and 70% compared to the previous quarter.
The analysts noted that despite increased investment in generative AI technologies, iFlytek has managed to achieve a turnaround. They praised the company’s “superior technological leadership” and maintained a buy rating on the stock.
Overall, iFlytek’s shares experienced a surge in value, demonstrating investor confidence despite the projected profit drop.
