Key points
- Naver reported a record 3.39 trillion won ($2.39B USD) in Q2 revenue on August 7, but operating profit fell 0.2% to 520.3 billion won ($367M USD). The stock closed down 7.1% at 210,000 won ($148 USD).
- Four days earlier, on August 3, Naver canceled 4,901,094 of its own shares, 3.1% of everything outstanding, worth about 1 trillion won ($706M USD).
- CEO Choi Su-yeon says the flat profit comes from AI infrastructure spending, including an Nvidia-backed data center project called AI Factory that starts service at 55 megawatts in the first half of 2027.
- Kakao posted its own record quarter the same week, operating profit up 36% to 277 billion won ($196M USD), and its stock rose instead of falling.
On August 7, Naver reported the best quarter it's ever had. Revenue came to 3.39 trillion won ($2.39B USD), up 16.2% from a year earlier, Naver's second record quarter in a row. The stock didn't care. It fell 7.1% that day, closing at 210,000 won ($148 USD).
The number that mattered more sat further down the release. Operating profit barely moved. It came to 520.3 billion won ($367M USD), down 0.2% from a year earlier. Revenue grew by double digits and profit didn't grow at all, so Naver's margin fell from 17.9% to 15.4%. The company blamed two things, spending to build out its AI infrastructure and the cost of this year's World Cup broadcast rights.
The AI Factory bet
CEO Choi Su-yeon spent much of the August 7 call explaining where the money is going. Naver and Nvidia (NVDA) are building an AI data center project the company calls AI Factory, with the investment firm Brookfield providing the capital behind it. "We plan to start service at 55 megawatts in the first half of next year, expand to 100 megawatts by the end of that year, reach 200 megawatts in 2028, and build gigawatt-scale AI computing infrastructure over the long term," Choi said.
She framed it as more than a side project. "The global AI Factory isn't a one-time business opportunity. It's an investment in a business that will grow over the medium to long term," Choi said, adding that the partnership with Nvidia keeps Naver's own upfront capital burden light while letting the business scale quickly.
Naver's own AI unit backs that up with numbers already showing up. Revenue from its enterprise AI and digital twin business rose 21.3% to 153.7 billion won ($109M USD) in the quarter, the fastest-growing piece of the business even before AI Factory itself starts bringing in money next year.
It's not as if Naver had been ignoring shareholders either. Four days before the earnings call, on August 3, Naver had already canceled 4,901,094 of its own shares, 3.1% of everything outstanding. That's about 1 trillion won ($706M USD), part of a shareholder-return plan the board approved July 24 and laid out back in February, a promise to return 25% to 35% of average free cash flow over 2025 and 2026 through buybacks, cancellations, and dividends. A trillion-won cancellation days before a quarter that missed on profit is an odd pairing. The stock fell anyway.
Kakao had a good week too
Kakao announced its own results the day before, on August 6, and it was a record too. Operating profit rose 36% to 277 billion won ($196M USD), about 22% above what analysts wanted. The market liked it. The stock rose 2.74% the next morning, to 39,350 won ($28 USD), a fourth straight day of gains.
Analysts framed Kakao's number as encouraging but not enough on its own. "The results beat market expectations, but where the stock goes from here depends on how the AI new business performs," said Kim So-hye, an analyst at Hana Financial Investment (하나증권). Lim Hee-seok, an analyst at Mirae Asset Securities (미래에셋증권), put it more bluntly, "The speed and profitability of AI monetization is what determines platform valuations now, not ad growth the way it used to be."
Naver faces the same question. Both companies are telling investors the same story, that this year's spending buys next year's AI business. Kakao's market believed it enough to keep buying. Naver's didn't, at least not on August 7.
Sources
- 더스쿠프, 최고 분기 매출 찍었는데… 네이버 주가 '7%' 빠진 까닭, on Naver's Q2 results and the stock reaction
- 이비엔뉴스, 네이버, 1조원 규모 자사주 소각… "주주가치 제고 지속", on the August 3 share cancellation
- 헤럴드경제, 최수연 네이버 대표 "글로벌 AI 팩토리 내년 상반기 매출로 성과낸다", on CEO Choi Su-yeon's AI Factory comments from the earnings call
- 한국경제, 카카오, 2분기 최대 실적에도… 증권가 향후 AI 성과가 관건, on Kakao's Q2 results and analyst reaction
- Our earlier coverage: Nvidia's stake in Naver and the AI Factory plan
Won figures are converted at 1,416 won to the dollar, the August 7, 2026 rate. Quotes are translated from Korean reporting. This article is for information only and is not investment advice.
