[Edaily Reporter Park Jeong-soo] On the 11th, LS Securities maintained its “Buy” rating on Naver (#NAVER), noting that its artificial intelligence (AI) infrastructure business, being pursued in partnership with NVIDIA, is emerging as a new growth driver. The firm raised its target price by 4.8% from 289,000 won to 303,000 won.
Seon Yu-jin, an analyst at LS Securities, stated, “We have positively assessed the potential for expansion in the AI infrastructure business and reflected a premium in the enterprise segment’s valuation,” adding, “Naver’s role is expanding beyond that of a company utilizing AI to that of an AI infrastructure provider.”
Naver recently disclosed its plans to build AI infrastructure in collaboration with NVIDIA through a regulatory filing and a conference call. The company plans to construct AI factories with a capacity of 100 MW by the end of 2027 and 200 MW by the end of 2028, while leaving open the possibility of expanding to a gigawatt (GW) scale within the next five to six years. The company explained that it has already secured demand for the initial 200MW of computing resources from a single customer.
LS Securities forecasts that the AI infrastructure business will establish itself as a new growth engine in the medium to long term. In particular, the firm viewed positively the fact that NVIDIA’s participation in customer acquisition and risk sharing could partially alleviate the burden of large-scale investment. Naver plans to invest over 10 trillion won in the AI, infrastructure, and Web 3.0 sectors over the next five years.
The earnings outlook is also positive. LS Securities estimated Naver’s revenue for this year at 13.914 trillion won, a 15.6% increase year-over-year, and operating profit at 2.423 trillion won, a 9.7% increase. For next year, it projected revenue of 15.858 trillion won and operating profit of 3.053 trillion won, representing growth of 14.0% and 26.0%, respectively.
However, the firm noted that maintaining growth in its core business is necessary for further stock price appreciation. Researcher Seon stated, “It is important to note that the platform segment, which includes advertising and commerce, still accounts for the largest share of Naver’s fair enterprise value.” He added, “While the company plans to expand the revenue share of its AI infrastructure to a level on par with its existing businesses (20 trillion won in revenue by 2032) over the medium to long term, uncertainty remains depending on the trend of growing AI demand in the market and the speed of infrastructure deployment.”
It is presumed that these factors contributed to the rapid increase in profit-taking selling following the announcement. Analyst Seon pointed out, “Given the market’s heightened expectations recently, sustained stock price growth requires: △ continued high revenue growth driven by shopping agents after the second half of the year, when the base effect of increased commerce fees fades; △ maintaining traffic in service competition with global AI players; and △ resolving uncertainties related to the virtual asset business (clarification of legislation, progress toward a merger).”