Samsung SDS Rewrites Its Origin Story Leading with AI

Stock Price Rises 39.8% This Year... Recovers to 170,000 Won Level After 2 Years and 3 Months
Generative AI Vision Based on Large Language Model (LLM) Unveiled... AI-Related Solution Sales Expected to Increase

Samsung SDS's stock price hit a year-to-date high. Expectations that it will rapidly grow as it supports Samsung Group's adoption of generative artificial intelligence (AI) acted as a catalyst for the stock price increase.

According to the financial investment industry on the 13th, Samsung SDS's stock price has risen about 38.7% this year. During the same period, the KOSPI increased by 13.4%. It recovered to the 170,000 KRW level for the first time in 2 years and 3 months since September 2021. On the 11th, it recorded 173,300 KRW intraday, setting a year-to-date high. Institutional investors led the price increase by net buying 109.5 billion KRW over the past month. Foreign investors also purchased 36.1 billion KRW worth during the same period.

In the third quarter of this year, Samsung SDS recorded sales of 3.2081 trillion KRW and operating profit of 193 billion KRW. Although sales decreased by 24% compared to the same period last year, operating profit increased by 4%. Profitability improved as sales in the high-margin cloud segment rose 57% year-on-year. Sales in the logistics business process outsourcing (BPO) segment decreased by 37% year-on-year. This was due to the combined effects of falling air and sea freight rates and reduced cargo volume that have continued since early this year.

Despite third-quarter results falling short of market expectations, the stock price is rising on AI optimism. Earlier, on September 12, Samsung SDS held 'Real Summit 2023' for corporate clients and unveiled its vision for generative AI based on large language models (LLM). Instead of developing language models directly, it decided to focus its capabilities on 'hyper-automation,' which automates tasks using existing LLMs like ChatGPT.

Samsung SDS introduced 'Brity Copilot,' a generative AI-based solution applied to common corporate work systems such as email, messenger, video conferencing, and data storage. Researcher Lee Sang-heon from Hi Investment & Securities explained, "Brity Copilot is a solution that automates not only simple repetitive tasks but also intellectual work. It can analyze voice to create video conference minutes and derive action plans, then send emails to responsible personnel, automating various tasks."

Samsung SDS is also preparing services that apply generative AI to systems such as enterprise resource planning (ERP), supply chain management (SCM), and human capital management (HCM). It is collaborating with partners like SAP, Onine Solutions, and Workday to develop solutions aimed at market leadership.

Researcher Lee Sang-heon said, "We can also provide customized cloud services for generative AI adoption," adding, "In an environment where companies are increasingly adopting generative AI to improve work productivity, growth will come by integrating various generative AI into all cloud services."

Expectations for full-scale growth starting next year are gaining momentum. Researcher Choi Kwan-soon from SK Securities said, "We expect to launch generative AI services in the first quarter of next year," and analyzed, "IT service sector sales will increase by 16.6% year-on-year next year." He also added, "In the logistics sector, stable sales growth is expected as the number of customers for the logistics platform Cello Square increases," and "Operating profit next year will exceed last year's level, which was a logistics boom period."

It was also cited as a positive factor that Samsung SDS can assist when affiliates, including Samsung Electronics, adopt AI. Researcher Oh Dong-hwan from Samsung Securities explained, "Samsung SDS will meet the AI adoption demand of various Samsung affiliates, starting with Samsung Electronics' Device Experience (DX) division," and "plans to actively support the group's generative AI adoption."

This content was produced with the assistance of AI translation services.