Value context and insight. lkm@koreatimes.co.kr
Naver hit by Apple's 'AI replacing search engine' remark
Naver's headquarters in Seongnam, Gyeonggi Province / Yonhap
By Lee Kyung-min
Naver shares took a dive Thursday, rattled by remarks from a top Apple executive about artificial intelligence (AI) potentially replacing online search engines, according to market analysts.
This concern also sent shares of Alphabet, Google’s parent company, tumbling by 7 percent, Wednesday (local time).
The analysts say the share prices will not be able to see a breakthrough due to concerns that AI-powered programs would take over the search engine market, the main revenue generator for Naver, the country’s top web portal.
Eddy Cue, Apple’s senior vice president of services, said Wednesday that the rise in AI use “will eventually replace standard search engine use.” He made the comments during a court hearing, according to a report by Bloomberg.
According to Korea Exchange, Naver shares closed at 188,700 won, down 5.22 percent from the previous session.
Naver is scheduled to release its first-quarter earnings Friday.
Analysts expect both revenue and operating profit to post growth from the previous year.
Shinhan Investment said Naver’s revenue in the first three months is expected to come to 2.79 trillion won, up 10.3 percent from a year earlier.
Operating profit, it added, is estimated to stand at 500.9 billion won, up 14 percent from the previous year. Market consensus has it at 511.1 billion won.
"The stock is declining amid weak overall market conditions and uncertainty," Shinhan Investment report said.
"The company is focusing on upgrading its existing businesses rather than bolstering AI-powered initiatives, leading to higher investor expectations. This will take time," it said.
Cue attended the hearing as a witness in a U.S. federal court case involving Google’s dominance in online search.
Cue said he expects to add artificial intelligence services from OpenAI, Perplexity and Anthropic as search options in Apple’s Safari browser in the future, according to the news report.
The Apple executive said searches on Safari declined for the first time in April, which he attributed to the rise in people using AI, according to the report.