Date: 23 September 2024
Broker: OCBC Investment Research (OIR)

Introduction

Sea Ltd (Ticker: SE US), a major player in the communication services sector, is grappling with the challenges posed by the transition to AI. Despite the company’s growth and regional dominance, its future strategy related to AI adoption remains unclear. With a focus on Southeast Asia, Sea Ltd has been cautiously approaching AI, and this report delves into the company’s current stance on AI development and its potential impact.

Caution in AI Transition

Sea Ltd’s founder, Forrest Li, has expressed concerns regarding the complexity of transitioning to AI, citing it as a difficult process for the company. However, Li has remained reticent about specific plans for developing AI tools or the company’s roadmap for AI adoption. This cautious approach reflects the challenges AI may pose to Sea Ltd’s core businesses, ranging from e-commerce to digital financial services.

Sea AI Lab (SEAL)

In response to the growing importance of AI, Sea Ltd has established the Sea AI Lab (SEAL), an internal research facility dedicated to exploring cutting-edge AI technologies. SEAL is focused on developing new AI advancements and sharing its findings with the wider community. However, despite this research initiative, the company has not yet revealed a clear strategy on how it plans to leverage AI for its business operations or integrate these technologies into its current services.

Uncertainty and Investor Sentiment

The uncertainty surrounding Sea Ltd’s AI plans has made investors cautious. While AI presents massive opportunities for operational efficiencies and business growth, Sea Ltd’s lack of a defined AI roadmap means the company may face potential disruptions across its various business segments. As a result, the report from OCBC Investment Research advises a more conservative outlook on Sea Ltd’s AI transition until the company provides further clarity on its strategy.

Conclusion

In conclusion, Sea Ltd is at a critical juncture as it navigates the complexities of AI integration. With the establishment of SEAL and the company’s ongoing research efforts, there is potential for future growth. However, until a more concrete AI strategy is presented, Sea Ltd remains in a cautious position as it faces the disruption that AI could bring to its business.