This article is for informational purposes only and is not financial advice. TheGatBull may earn a commission from some links at no cost to you — see our disclosure and full disclaimer.
Korea’s KOSPI just had the kind of year that gets written into textbooks — a first-ever close above 9,000 (9,063.84 on June 18, 2026) and a year-to-date gain of roughly +87%, among the best of any major market on the planet. And yet the two companies almost every Korean touches every single day — Naver (KRX: 035420) and Kakao (KRX: 035720) — sat the party out. Naver is down about 16% year-to-date; Kakao is down about 28%. That gap is the whole story. This is not financial advice.
The short answer: a national stock isn’t automatically a good stock
The two didn’t get left behind because people stopped using them — Naver search and KakaoTalk are still woven into daily Korean life. They got left behind because 2026’s market had one entry exam: show the receipt that you turned AI into revenue. Naver and Kakao haven’t handed that receipt in yet. AI investment costs went up; AI revenue hasn’t shown up. Buying them here is a bet that the rebound comes from restored trust, not yet from earnings — and the market is making that bet very differently for each name. (Again: this is information, not advice.)
Why now — the two giants the bull market skipped
2026’s Korean market rode an AI and semiconductor super-cycle to record highs, and the fuel was institutional and foreign buying chasing companies that convert AI into cash. Naver and Kakao kept their grip on daily life but not on that narrative, and the rally’s money flowed around them. The tell: foreign and institutional investors have been net sellers of both, leaving domestic retail as the main buyer.
🎩 Under the Gat — A stock that can’t climb onto a bull’s back always has a reason, and here it isn’t “people don’t use it.” Naver search and KakaoTalk are daily habits for nearly every Korean. The real reason is the speed of turning that daily attention into sales. Koreans have a phrase — ppalli-ppalli (빨리빨리), “hurry, hurry.” On AI monetization, the market thinks these two are moving anything but ppalli-ppalli.
Both sides, fairly — bull vs. bear
The bull case. Naver and Kakao are the two front doors to Korean digital life — Naver owns search, ads and commerce; Kakao owns the messenger nearly every Korean opens dozens of times a day. AI is a new engine to monetize that traffic, and bulls argue the price already values that engine at zero. CLSA, resuming coverage in mid-June 2026 after roughly ten months away, pegged Naver’s 2027 forward P/E at about 15.6x — the bottom of its historical band — and sees room for years of double-digit growth from AI and commerce.
The bear case. The other side is cold: “we heard the promise, we’re still waiting on the receipt.” AI infrastructure spending lifted costs and depreciation first, while AI revenue hasn’t followed, and target prices have been cut along the way. Most of all, institutions and foreigners have already walked — the rally’s fuel simply skipped these two.
🎩 Under the Gat — Bulls and bears see the same fact — “AI spend went up, monetization lagged.” They split on the reading: bulls say “so it’s cheap,” bears say “so it’s unproven.” One thing outside investors should know — Korea’s retail army, the donghak gaemi (동학개미), is now the main buyer holding these two up, betting on the AI promise institutions abandoned. Stocks left to retail can snap back fast when trust returns — and stay pinned for a long time if it doesn’t.
The anchor for US readers: Naver ≈ Google, Kakao ≈ Meta
For readers outside Korea, the fastest way in is to tie each to a familiar US name.
- Naver is, roughly, Korea’s Google — the dominant force in search and digital advertising, with commerce (shopping) and fintech bolted on. (Anchor: Alphabet.)
- Kakao is, roughly, Korea’s Meta — but built on top of the “national messenger,” KakaoTalk, which makes it closer to a Meta riding on WhatsApp. (If you want a non-US anchor, think Tencent’s WeChat model.)
| Naver | Kakao | |
|---|---|---|
| One-line identity | Korea’s search, ad and commerce gateway | Korea’s national-messenger super-app |
| US anchor | Alphabet (Google) | Meta (non-US: Tencent) |
| Market cap (approx.) | ~₩33 trillion (~$24B) | ~₩18 trillion (~$13B) |
| Core moat | Search share, commerce data, ads | KakaoTalk’s lock on daily life |
| AI product | AI shopping agent (tied to commerce) | Kanana — in-chat AI, early stage |
| Market verdict (CLSA) | Outperform, target ₩300,000 | Hold, target ₩42,000 |
| 2026 YTD (approx.) | about -16% | about -28% |
| Decisive difference | Clearer monetization path (ads + commerce) | Weaker monetization proof; labor overhang |
Not a perfect parallel — Google and Meta already monetize AI at scale, while Naver and Kakao have to prove it “from here,” and the market caps differ by tens of times. Use the anchors to orient, not to equate. (FX ~1,380 won/USD; caps approximate, mid-June 2026.)
The fork: why the market is generous to Naver and stingy with Kakao
CLSA’s mid-June diagnosis captures the split.
- Naver: worries over AI spending are “overdone.” The existing cash engines — advertising and commerce — are sturdy, and AI layers on top of them, so the monetization path is visible. That logic underpins an outperform call and a ₩300,000 target.
- Kakao: earnings are improving, but there’s no clear near-term catalyst to drive the multiple higher. Kanana is still early, and agent commerce won’t show meaningful results until later. CLSA’s call is hold, target ₩42,000 — and a first-ever headquarters-level strike made it worse.
🎩 Under the Gat — Here’s the Korea-specific variable outsiders miss: Kakao’s weakness isn’t only technical. After labor talks collapsed in May 2026, unionized workers staged Kakao’s first-ever HQ strike, and the stock plunged about 35%, breaking below 40,000 won. In Korea, governance and labor noise at a platform giant is itself a discount factor. Kakao has to solve two problems at once — “prove the AI” and “settle the house.” Fixing only one may not be enough.
Risks worth naming — for both sides
- Monetization delay. If AI revenue keeps slipping to “next quarter,” a floor valuation can find a lower floor.
- Crowded into retail. Names that institutions vacated and retail filled tend to be volatile.
- Competition. Search, commerce and messaging all face intensifying pressure from global big tech and homegrown AI startups.
- Kakao-specific. Labor and governance overhang, plus Kanana’s unproven competitiveness.
- Naver-specific. Heavier infrastructure spending could pressure near-term margins via rising depreciation.
The bottom line: both are companies Koreans use every day, but a national stock is not automatically a good stock. 2026’s market asks one question — “when, and how much, will you turn AI into money?” Naver is judged closer to the answer; Kakao is still on the witness stand. Either way, the trigger for a rebound is an earnings receipt. Watch the next quarter’s AI revenue line — the numbers, not the headlines.
— Mr. Gat 🐂
This is not financial advice. Past performance does not guarantee future results, and all figures should be checked against primary sources as of your trade date.
Frequently Asked Questions
The KOSPI soared — why did Naver and Kakao get left behind?
The 2026 rally was led by AI and semiconductors, and by proof of AI being turned into revenue. Naver and Kakao still dominate search and messaging, but their evidence of monetizing AI lagged, so the rally’s fuel — institutional and foreign buying — passed them by. This is not financial advice.
So is Naver a better stock than Kakao?
There is no “better/worse” verdict here (not financial advice). But as of June 2026 the market and some brokerages (CLSA) see Naver’s path to monetization as clearer, and put Kakao in a “needs to prove it” bucket. Those views shift with each quarter’s earnings.
Can foreigners buy Naver and Kakao directly?
Yes. Both are KRX-listed (Naver 035420, Kakao 035720), so foreigners can trade them via an omnibus account or a broker with Korea access such as Interactive Brokers.
What is the biggest swing factor for Kakao’s stock?
Three things: whether its AI (Kanana and agent commerce) actually generates revenue, whether the labor and governance noise gets resolved, and whether cost discipline lifts operating margin. Its first-ever headquarters strike in 2026 already hit sentiment hard.
Is this the bottom of the “AI discount”?
Bottoms are only clear in hindsight. Bulls see a floor valuation; bears see room to fall without proof. The key thing to watch is the moment AI revenue starts showing up as actual numbers in the earnings — not in the headlines. This is not financial advice.
This article is for informational purposes only and is not financial advice. TheGatBull may earn a commission from some links at no cost to you — see our disclosure and full disclaimer.