Naver Launches External AI Factory Business... Growth Stock Narrative Restored [Click eStock]

Securing Growth Drivers Through Nvidia Partnership
Establishing Position as an AI Cloud Infrastructure Provider
Revenue Target of 40 Trillion Won and 20% Profit Margin "Achievable"

Jensen Huang, CEO of NVIDIA, is shaking hands with Lee Hae-jin, Chairman of Naver, during his visit to Naver's 1784 building in Seongnam, Gyeonggi Province on the 8th. Photo by Yonhap News.

Naver is expanding its AI Factory business in earnest through its collaboration with Nvidia. As a result, there are forecasts that both mid- to long-term earnings growth and share price momentum, which had previously remained within a limited range, could rise simultaneously.

On June 9, Hanwha Investment & Securities maintained its "Buy" investment opinion on Naver with a target price of 300,000 won, citing this background. The previous day's closing price was 279,000 won.

Naver has agreed to jointly build a massive artificial intelligence (AI) cloud infrastructure with Nvidia, targeting both the Korean and global markets. Through this initiative, the company plans to actively commercialize its AI Factory business for external clients. As a reference point, Hanwha Investment & Securities cited CoreWeave in the United States, noting that Naver differentiates itself by possessing both search and proprietary AI technologies.

Until now, Naver's cloud and AI infrastructure business had primarily focused on meeting internal demand. However, with this collaboration, the company is now beginning to commercialize these capabilities for external customers, thereby securing a new mid- to long-term growth engine.

Naver initially plans to secure 55MW of AI Factory capacity by the first half of 2027, 100MW by the end of 2027, and a cumulative 200MW by the end of 2028, all through a leasing model. The site to accommodate 200MW has already been secured. Afterward, through its own expansion in Sejong and new greenfield construction, the company aims to expand to a scale of 1GW within five to six years.

Analysts say that all aspects have been confirmed, from funding to customer demand and business model. For the initial 200MW buildout, Naver will invest 1 billion dollars, and a strategic partner (undisclosed) will also contribute 1 billion dollars. Subsequently, external funding will be raised through special purpose vehicles (SPVs) and other methods. Hanwha Investment & Securities estimates that ultimately, the required funding for a 1GW-scale business will be between 50 billion and 60 billion dollars.

Sohye Kim, a researcher at Hanwha Investment & Securities, said, "The structure of tying up the initial 200MW in leases and then switching to self-expansion in Sejong once demand is confirmed is efficient," adding, "As Naver has already revealed that customers requesting over 200MW exist, the company is not being led as a supplier but is instead able to control demand. This allows Naver to secure favorable pricing power and long-term contract terms."

The AI Factory business may also have a positive impact on Naver's profitability. Currently, its core businesses—commerce and advertising—are facing margin pressures due to heightened platform competition. In contrast, the AI Factory model generates stable annual revenue if customers are secured through long-term contracts. As utilization rates increase, fixed costs are diluted, which can further improve profit margins.

Naver has set a five-year revenue target of 40 trillion won each from its existing business and the AI Factory. The company is also targeting a 20% operating margin. Kim commented, "In the AI infrastructure industry, revenue per infrastructure scale is relatively visible, so these targets are not overly ambitious. Naver has been undervalued at around one times price-to-book ratio (PBR) due to a lack of growth narrative, but once AI Factory revenue becomes significant, the company could be valued as a cloud infrastructure provider similar to CoreWeave rather than just an internet platform."

This content was produced with the assistance of AI translation services.