Sea's New AI Cloud Offering Could Affect Capital Allocation

Dow Jones12:50

0450 GMT - Sea's new AI cloud offering could affect capital allocation going forward, John Choi and Jackson Wei of Daiwa Capital Markets say in a note. In the long term, Sea could gain exposure to a large and rapidly growing AI infrastructure market that isn't currently reflected in market expectations or valuation frameworks, they write. However, significant capital will be required to scale and become competitive in its new cloud business, the analysts add. In the near term, investors will likely focus primarily on the likelihood, timing and potential valuation of a listing of Sea's financial-services arm, they say. While near-term margin pressures may persist as Sea prioritizes growth, a standalone listing could encourage investors to place greater value on Monee independently, they add.

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