Is AI investment slowing Naver's profits?
The outlook for internet giant Naver’s third-quarter earnings is turning gloomy, with analysts expecting operating profit to decline by double digits, citing spending on artificial intelligence (AI) infrastructure and the slow monetization of AI services. According to market tracker FnGuide, the brokerage consensus estimate for Naver's third-quarter operating profit stood at 500 billion won…
Naver, the major internet firm, is facing a concerning outlook for its third-quarter earnings, with analysts predicting a significant drop in operating profit. The primary reasons cited for this decline are the heavy investments in artificial intelligence (AI) infrastructure and the slow revenue generation from AI services. According to market research firm FnGuide, the estimated operating profit for the third quarter is 500 billion won ($377.5 million), a 12.4% decrease from 570.66 billion won in the same period last year.
This stands in stark contrast to the projected 12% revenue growth, which is expected to increase from 3.14 trillion won to 3.51 trillion won. Rising costs, particularly higher marketing expenses for Naver's commerce business, increased broadcasting rights costs for World Cup coverage, and higher depreciation expenses due to GPU investments, are the key factors contributing to this downward trend.
Within its operating expenses, Naver allocates funds across development, operations, partnerships, infrastructure, and marketing, with infrastructure costs being a notable contributor to the decline.
Written by urgent.news from The Korea Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
