Naver, which had been left behind in this year's Kospi rally, has entered a rebound phase following Nvidia's equity investment in the company. Analysts say the stock has significant room to reach 400,000 won ($273).
Naver shares surged about 10 percent in early trading Monday after Nvidia disclosed its stake acquisition and the details of the two companies' partnership, according to Korea Exchange. The stock briefly jumped as much as 13 percent intraday, touching 234,500 won.
Before Monday, Naver shares had risen just 14.43 percent this year through Friday — far below the Kospi's 58.76 percent gain over the same period. The stock had drawn criticism for lagging even among large-cap growth names.
The announcement of the Nvidia partnership has now sparked a sharp reversal.
Naver said Monday it had secured a $1 billion strategic investment from Nvidia through a third-party allotment of new shares. The deal gives Nvidia 7,241,564 Naver common shares, representing a 4.5 percent stake.
It is the first time in 22 years that Naver has conducted a third-party allotment, and the first since its move to the Kospi main board in 2008.
The investment follows a partnership the two companies announced in June to build a gigawatt-scale global AI factory. With the 4.5 percent stake, Nvidia becomes Naver's third-largest shareholder, behind the National Pension Service and BlackRock.
Naver also struck a separate partnership with global investment firm Brookfield to raise up to $9 billion for AI infrastructure financing.
Analysts are interpreting the collaboration not merely as a positive catalyst but as a structural shift in Naver's business model, and see substantial upside from current levels. The highest target price on the street is 450,000 won, set by DS Investment Securities last month.
Kim Dong-woo, an analyst at Kyobo Securities, said in a report Monday that Naver's move into the AI factory business through the Nvidia partnership "marks a full-scale entry into a capital-intensive, business-to-business model." He added that while Naver had previously been passive about securing external-facing data center capacity, it was now launching the AI factory business after confirming demand for AI computing across Asia, including South Korea. Kim maintained his earlier target price of 390,000 won.
Lee Hyo-jin, an analyst at Meritz Securities, kept a buy rating and a target price of 330,000 won, and outlined three key implications of the deal: Naver's asset allocation will shift with its B2B push; priority access to Nvidia GPUs will give it an edge in securing the latest hardware; and the use of leverage could improve its return on equity.
Meritz Securities projected that Naver's AI factory business would generate 14 trillion won in sales and 3.4 trillion won in operating profit by 2032 — surpassing Naver's consolidated operating profit of 2.21 trillion won last year.
On why Nvidia chose Naver as a partner, Lee said the Korean internet company "can help Nvidia maintain its industry edge by providing software feedback, and is an operator whose business does not overlap with Nvidia's while being well-positioned to raise the financing essential for data center expansion."
jiyun@heraldcorp.com
