Brokerages raised price targets after Naver announced a data center partnership with Nvidia, but profit-taking quickly erased the previous day's gains

Nvidia CEO Jensen Huang poses with Naver Chairman Lee Hae-jin during a visit to Naver's 1784 headquarters in Seongnam, Gyeonggi Province, on Monday. [Yonhap]
Nvidia CEO Jensen Huang poses with Naver Chairman Lee Hae-jin during a visit to Naver's 1784 headquarters in Seongnam, Gyeonggi Province, on Monday. [Yonhap]

Naver, the bellwether of South Korea's internet sector, tumbled more than 10 percent in morning trading Tuesday — a sharp reversal from the 9 percent surge it posted Monday when Nvidia CEO Jensen Huang's visit to Seoul put the spotlight on the two companies' partnership.

Naver was trading down 11.65 percent at 246,500 won (about $159) on the Korea Exchange as of 10:43 a.m. Tuesday.

The stock opened up 2.51 percent at 286,000 won but almost immediately gave back its gains and turned negative, wiping out all of Monday's 9.02 percent advance. Analysts said profit-taking appeared to be driving the selloff.

On Monday, Naver disclosed plans to jointly build a global AI factory with Nvidia. The company said it would begin operating a 55-megawatt infrastructure in 2027 and expand its AI infrastructure business in stages, with the two companies sharing profits and risks as they work toward a facility of up to 1 gigawatt in capacity.

The announcement prompted brokerages to take note of Naver's potential shift from a business-to-consumer model to a business-to-business one.

"The most important takeaway from this announcement is that Naver has secured the growth potential that had been weighing on its share price," said Lee Jun-ho, an analyst at Hana Securities. "By entering the neo-cloud business through its Nvidia partnership, Naver can now target both domestic and global sales, pointing to a complete transformation of the company's business profile."

Several brokerages raised their price targets for Naver on Tuesday — Hana Securities, Shinyang Securities and Daol Investment Securities to 400,000 won, DS Securities to 450,000 won, Kyobo Securities to 390,000 won, and Samsung Securities to 300,000 won.

"Even on a conservative estimate, the present value of the AI factory business reaches 19 trillion won," said Choi Seung-ho, an analyst at DS Investment Securities, who raised his price target from 300,000 won to 450,000 won.


jshan@heraldcorp.com