Naver Jumps 8.6% as $725 Million Treasury Stock Retirement Adds to AI Tailwinds
Summary
- Analysts say Naver's AI factory business could become a new growth pillar and drive a re-rating of the company's valuation.
- Nvidia's strategic investment, priority GPU procurement and the use of Brookfield's project financing (PF) have eased the burden of large-scale investment and improved earnings visibility.
- As asset allocation shifts from platform-centered operations to AI infrastructure, Naver stands to expand its B2B-based revenue streams and improve ROE, though weak investment sentiment in South Korea's stock market may delay a full share-price response.
Forecast Trend Report by Period
Analysts say Naver Corp.'s artificial intelligence factory business could become a new growth pillar and drive a re-rating of the company's valuation. Nvidia Corp.'s strategic investment has eased uncertainty over graphics processing unit supply, customer acquisition and funding.
Naver closed 8.6% higher at 225,000 won on July 27 on South Korea's Kospi market. The stock opened at 221,000 won and rose as much as 21% in premarket trading, reaching 255,000 won in early regular-session trading before paring some gains.
Brokerages focused on the improved viability of the AI factory business. Naver now stands a better chance of securing a stable supply of the latest GPUs through Nvidia, while Brookfield's project financing could reduce the burden of large-scale investment. Earnings visibility has also improved after the company secured potential customers for 200 megawatts of capacity starting in 2028. "It has been confirmed that Naver's strategic partner is Nvidia," Lee Jun-ho, an analyst at Hana Securities, said. "In South Korea, Naver will serve as the official forward base for Nvidia's AI factory."
Expectations are also building for a shift in Naver's business structure. Analysts say the company is poised to expand beyond its platform-centered business into a business-to-business AI infrastructure operation. "This is meaningful in that Naver's asset allocation is shifting from platforms to AI infrastructure," Lee Hyo-jin, an analyst at Meritz Securities, said. Priority GPU procurement and a leveraged structure using project financing should help lift profitability and return on equity, she added.
Some market participants say weak sentiment in South Korea's stock market could cap the shares' gains in the short term. "South Korea's power grid is stable, and electricity costs are lower than in most major advanced economies, which gives the data center business a competitive edge," a financial investment industry official said. "But with sentiment in the local stock market still weak, it will take time for the positive factors to be fully reflected in the share price."
Park Ju-yeon, Hankyung.com reporter grumpy_cat@hankyung.com
Korea Economic Daily
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