Goldman Sachs has reinstated a “buy” rating on Kakao Corp., setting a target price of 85,000 won, which represents a striking 47.8% increase from the company’s closing price of 57,500 won. This bullish outlook is largely driven by Kakao’s promising foray into the generative artificial intelligence (AI) sector, particularly through its strategic partnership with OpenAI, the developer behind ChatGPT. The investment firm foresees significant new revenue streams emerging as Kakao embeds AI services into its highly popular KakaoTalk messenger platform.
KakaoTalk holds an impressive 95% market share of South Korea’s mobile messenger users, making it an ideal vehicle for deploying consumer-centric generative AI services. Goldman Sachs projects that by 2030, the monthly active users (MAU) of ChatGPT integrated within KakaoTalk will reach approximately 21 million. This widespread adoption could enable Kakao to capture an additional 9 percentage points of market share in search advertisements within five years, challenging incumbent players in Korea’s digital advertising ecosystem.
Beyond generative AI, the investment note also highlights Kakao’s push into “agentic AI” services. These AI agents will take proactive actions based on user location and preferences, generating an estimated 1.1 trillion won (roughly $801 million) in additional sales by 2030. This could further diversify Kakao’s revenue base beyond advertising.
However, Goldman Sachs also flags potential risks. The incumbent search engines are deeply entrenched in user habits, so there may be resistance to shifting toward AI-based search within KakaoTalk. Furthermore, regulatory scrutiny could arise, particularly concerning the use of sensitive personal data such as location information.
In contrast, Goldman Sachs downgraded South Korean internet giant Naver from “buy” to “neutral,” cutting its price target from 330,000 won to 280,000 won. The downgrade reflects a more cautious outlook on Naver’s core search business amid intensifying competition, especially from Kakao’s emerging AI-powered messaging platform. Analysts interpret this as a relative boost to Kakao’s standing in the race for leadership in generative AI.
Supporting this perspective, KB Securities also maintains a “buy” rating on Kakao while raising its target price to 55,000 won. The brokerage anticipates that Kakao will launch a Korean-style super AI agent platform in collaboration with OpenAI by the second half of 2025. One of the standout upcoming services is “KanaNa,” an AI companion that employs multiple agents to provide responsive, personalised user interactions. These innovations are expected to increase user engagement and create fresh advertising opportunities within KakaoTalk’s interface, contributing to a more diversified revenue model.
Kakao’s CEO Jung Shin-ah has expressed strong ambition for AI-driven innovation, aiming for a transformative leap forward in 2025. The company’s collaboration with OpenAI will see the integration of ChatGPT’s technology across multiple Kakao services, targeting the platform’s 50 million users and enhancing the overall user experience.
Meanwhile, OpenAI itself continues to demonstrate robust growth, recently surpassing 3 million enterprise users, and expanding its toolset with AI-driven workplace productivity solutions. This broader AI momentum enhances the strategic value of Kakao’s partnership with OpenAI, positioning the South Korean firm at the forefront of applying advanced generative AI models tailored to a local context.
Despite the optimism, the trajectory for AI services in Korea’s fiercely competitive digital market remains uncertain. User adoption patterns, regulatory challenges, and established search engine loyalties are significant factors that could affect Kakao’s ability to dominate this space. Nonetheless, Kakao’s integration of generative and agentic AI within its widely used messenger app represents a pioneering approach that could reshape the digital advertising and search landscape in South Korea in the coming decade.
Source: Noah Wire Services
