AI leaders Naver, Kakao struggle despite KOSPI's record-breaking rally
Naver headquarters in Seongnam, Gyeonggi Province / Newsis
Naver and Kakao, once hailed as the country’s flagship IT blue chips and leading artificial intelligence (AI) players, have largely failed to join the recent KOSPI rally, even as the benchmark index has continued to climb and fuel optimism it could hit 5,000 points.
According to the Korea Exchange Monday, Kakao’s shares fell 4.7 percent from the start of 2026 through last Friday, while Naver posted a gain of just over 1 percent, sharply underperforming compared to the broader market. KOSPI closed above the 4,800 level on Friday to set fresh record highs.
Data from NH Investment and Securities showed that nearly 90 percent of Kakao investors are currently in the red, with an average return of minus 29.57 percent. Naver is little better off, with 75.3 percent of its investors sitting on losses and an average return of minus 9.38 percent.
Kakao’s stock hit an all-time high of 173,000 won ($117) on June 24, 2021, during the market surge at the height of the COVID-19 pandemic, but has trended downward ever since.
Naver, meanwhile, surged to around 300,000 won last June following the launch of the Lee Jae Myung administration and the appointment of former Naver executive Ha Jung-woo as senior presidential secretary for AI and future planning. After months of volatile trading, however, the stock is now trading about 15 percent below that peak.
Market analysts said Naver and Kakao’s long-standing image as the main pillars of the government-led sovereign AI project has, paradoxically, weighed on their share prices.
Investor sentiment deteriorated sharply after both companies said they would not return to the competition, overseen by the Ministry of Science and ICT, to build sovereign AI foundation models after being dropped from the race. The disappointment was particularly pronounced in Naver’s case, as the IT giant had been widely viewed as a strong contender.
Kakao's data center in Ansan, Gyeonggi Province / Courtesy of Kakao
Still, analysts said future stock performance will hinge on whether the two firms can deliver tangible results from their AI initiatives, as both remain actively engaged in AI development.
Naver is expected to pivot away from building a Korea-specific sovereign AI model and instead focus on exporting sovereign AI systems overseas. The company is already involved in such projects in Thailand, Saudi Arabia and Morocco.
In addition, as the only domestic full-stack AI company capable of managing the entire AI value chain — from development to deployment — using its own technology, Naver is still seen as a potential partner for the government in other AI-related projects.
“Naver’s exclusion from the national competition came as a surprise given its strong AI competitiveness early on. But that does not mean its capabilities have weakened,” said Ahn Jae-min, an analyst at NH Investment and Securities. “Rather, Naver is likely to demonstrate its strengths as a private-sector player by capitalizing on its edge in sovereign AI business development.”
Kakao, for its part, plans to roll out a series of AI services in the first half of 2026, including Kanana in KakaoTalk and Kanana Search.
“If Kakao’s AI revenue models become more visible, expectations for AI could once again be reflected in the stock price,” said Nam Hyo-ji, an analyst at SK Securities.