Youdao Inc (NYSE:DAO) witnessed a 5% surge in its stock price on Friday, following the company's impressive fourth quarter and full-year 2024 financial results. The stock's rally can be attributed to Youdao's strategic integration of artificial intelligence (AI) and large language models (LLMs) across its core businesses, driving profitability and paving the way for future growth opportunities.

In a significant milestone, Youdao achieved its first-ever annual operating profit in 2024, marking a substantial improvement in financial health. The company reported a net income of RMB82.2 million, a remarkable turnaround from the loss of RMB466.3 million in 2023. This achievement was driven by Youdao's focus on strategic projects and the streamlining of loss-making operating units.

Youdao's CEO, Dr. Feng Zhou, highlighted the company's strategic focus on two key areas: AI-driven education technology and AI-driven online marketing technologies. The integration of cutting-edge AI and reasoning models, such as DeepSeek and Youdao's proprietary Confucius models, has opened up exciting opportunities across the company's product offerings.

In the education sector, Youdao plans to enhance its offerings by leveraging AI to improve content quality, gain deeper insights into customer needs, and establish leadership positions in key product segments. The company aims to introduce AI tutoring as a core element of its course offerings, providing enhanced learning experiences for customers.

Additionally, Youdao's online marketing services segment is poised for substantial growth in 2025 by leveraging AI and LLM technologies. The company's strategic partnerships with industry giants like NetEase Group, TikTok, and Google have laid a solid foundation for global expansion and increased advertising efficiency.