South Korea’s leading platform companies, Naver and Kakao, are both signaling record-breaking second-quarter earnings, but their stock prices continue to slide. The market’s gaze has already moved past the Q2 report cards, turning toward whether their AI businesses can achieve real monetization in the second half of the year.

According to financial data provider FnGuide on the 8th, Naver’s Q2 consolidated revenue consensus stands at ₩3.35 trillion (approximately $2.2 billion), with an operating profit of ₩572.7 billion (approximately $378.5 million). This represents a 14.8% increase in revenue and a 9.8% rise in operating profit compared to the same period last year, which would mark a record Q2 performance if the forecasts hold.

Kakao is also expected to set a new Q2 record. Its revenue consensus is ₩2.06 trillion (approximately $1.4 billion), with an operating profit of ₩223.4 billion (approximately $147.7 million), projected increases of 1.4% and 20.1% year-over-year, respectively. While revenue growth is relatively modest, the operating profit surge stands out, driven by cost efficiencies.

Despite these rosy earnings forecasts, Naver and Kakao shares have plunged 26.28% and 15.71% over the past month. On the 26th of last month, both stocks hit 52-week lows during intraday trading. Securities analysts agree that the already anticipated growth of their legacy businesses is insufficient to persuade investors, and that the performance of their AI ventures in the second half will be the key to a stock rebound.

Naver Bets on AI Advertising and AI Factory

Naver’s strategy for the second half is to diversify its revenue structure, which is currently centered on its platforms, through AI advertising and its AI Factory business. First, it plans to expand the coverage of its AI briefing feature in its search service from the current high-20% range to 40% by year-end. Starting in mid-July, it will introduce a cost-per-click (CPC) billing model for its generative AI ads, initiating full-scale monetization.

Beginning with generative AI ads integrated with shopping and local services, Naver aims to scale up monetization from the third quarter. It also plans to introduce an advertising model for its conversational search service, “AI Tab,” during the fourth quarter. Given that AI already contributed over 50% of the advertising revenue growth in Q1, a key point to watch is whether AI-powered search can translate into further ad revenue increases.

During the Q1 earnings conference call, Naver CEO Choi Soo-yeon highlighted “the conversion contribution of agent-based recommendations leading to actual purchases and reservations” as a key metric, emphasizing AI’s role in commerce.

Simultaneously, Naver is targeting the B2B market by pursuing an AI Factory business in partnership with Nvidia. In June, the two companies announced a plan to build a gigawatt (GW)-scale AI Factory. An AI Factory is a specialized data center that goes beyond simple data storage to perform AI training and inference, offering a business model that provides computing infrastructure and operating environments to companies seeking to adopt AI.

However, investment burdens appear unavoidable for the time being. Securities analysts estimate that Naver will spend approximately ₩1 trillion (approximately $661.0 million) on GPU investments alone this year. Lee Hyo-jin, an analyst at Meritz Securities, noted, “While AI is contributing to Naver’s growth, the lack of visible margin expansion in its business units makes it somewhat insufficient to convince investors. As cost investments for securing computing assets and commerce market share continue, the future earnings contribution of the AI business will be a key variable for a corporate value revaluation.”

Kakao Evolves KakaoTalk Ecosystem with ‘Agentic AI’

Kakao is focusing on building an “agentic AI” platform based on KakaoTalk, connecting search, recommendations, reservations, and payments. The plan is to link “Kanana in KakaoTalk” and “Kanana Search” with existing services like gifting, reservations, and payments, and to expand integration with external commerce partners.

During the Q1 conference call, Kakao CEO Chung Shin-a stated that the mid-to-long-term goal is for “all 50 million KakaoTalk users to have a personalized agent.” The cumulative number of “GPT in Kakao” subscribers is currently estimated at around 11 million, but analysts point out that service competitiveness and tangible monetization results are more important than user growth alone.

Lee Jong-won, an analyst at BNK Investment & Securities, commented, “If Kanana-based agentic commerce firmly establishes itself as a structure resolved within the chatroom, commerce can become a touchpoint for AI advertising, payment, and recommendation revenue, rather than just a commission-based business. If transaction completion rates within KakaoTalk increase, it could lift the platform’s profit margin to the next level.”

Divergent Analyst Views: ‘Overweight’ on Naver, Target Cuts for Kakao

Securities analysts’ views on the two companies’ second-half AI prospects are somewhat divergent. For Naver, the prevailing opinion is that the value of its new AI ventures is barely reflected in its stock price, presenting a buying opportunity.

Shin Eun-jung, an analyst at DB Securities, assessed, “Naver has quietly returned to an unburdensome price level. With a 12-month forward price-to-earnings ratio (PER) of 17.4 times, it is an attractive range even from a range-bound trading perspective.” Lee Ji-eun, an analyst at KB Securities, also maintained an overweight rating, stating, “If the disclosure of AI Factory partners and clients, and contract signings follow, the stock price is highly likely to react elastically to even small momentum.”

In contrast, the view on Kakao is relatively cautious. DB Securities lowered its target price for Kakao from ₩69,000 (approximately $45.61) to ₩57,000 (approximately $37.68). Analyst Shin Eun-jung said, “While its core business performance is stable, the securing of external AI partners and a concrete revenue model have not been confirmed. In the second half, it needs to find an AI breakthrough centered on Kanana in Talk.”

BNK Investment & Securities also cut its target price from ₩70,000 (approximately $46.27) to ₩61,000 (approximately $40.32), and Hanwha Investment & Securities lowered its target from ₩70,000 to ₩62,000 (approximately $40.98). Kim So-hye, an analyst at Hanwha Investment & Securities, forecasted, “The performance of AI services will be most critical in the second half. A gradual re-rating will occur as the monetization potential of AI agents is confirmed, even partially.”

AI Monetization, Not Earnings, Is the Fork in the Road for Second-Half Stock Prices

While both Naver and Kakao are championing AI as their next growth engine, their strategic directions differ markedly. Naver is focused on diversifying its revenue structure by expanding into B2B businesses through AI advertising and AI Factory, whereas Kakao is concentrating on integrating AI agents into the KakaoTalk ecosystem to enhance its advertising and commerce competitiveness.

The consensus among securities analysts is that the investment thesis for platform stocks in the second half hinges not on how many AI services are launched, but on how much AI can boost the growth rate and profitability of their existing businesses. Despite the favorable news of record Q2 earnings, both companies face a critical test: they must gain the upper hand in the earnings race, beyond the AI technology competition, to revive their battered stock prices.