Shares of Naver, South Korea’s leading web portal, experienced a sharp decline following remarks made by a senior Apple executive regarding the potential impact of artificial intelligence (AI) on search engines. The comments, which suggested that AI could eventually replace traditional search engine usage, caused concern among market analysts and investors.
Notably, the statements from Eddy Cue, Apple’s senior vice president of services, also had a ripple effect on Alphabet, the parent company of Google, with its shares plummeting by 7 percent. The Korea Exchange reported that Naver shares closed lower, reflecting a 5.22 percent decrease from the previous session. This decline was attributed to fears that AI-powered technologies could disrupt the search engine market, a key revenue source for Naver.
Analysts anticipate Naver’s upcoming first-quarter earnings report, expecting growth in both revenue and operating profit compared to the previous year. Projections suggest a revenue increase of 10.3 percent year-on-year, reaching 2.79 trillion won, while operating profit is estimated to rise by 14 percent to 500.9 billion won. Market consensus places operating profit slightly higher at 511.1 billion won.
Shinhan Investment highlighted that the stock’s decline was influenced by broader market conditions and uncertainties surrounding Naver’s strategic focus. The company’s emphasis on enhancing existing business operations rather than aggressively pursuing AI initiatives has led to heightened investor expectations, a factor that may require time to materialize.
Eddy Cue’s participation in a U.S. federal court case involving Google’s online search dominance shed light on Apple’s plans to integrate AI services into its Safari browser. Cue mentioned potential partnerships with AI providers such as OpenAI, Perplexity, and Anthropic to enhance search capabilities. He noted a recent decline in Safari searches, attributing it to the growing popularity of AI-driven solutions.
As the tech industry continues to evolve with advancements in AI technology, companies like Naver are facing the challenge of adapting to changing market dynamics. The intersection of AI and search engines poses both opportunities and threats for industry players, necessitating strategic innovation and adaptation to maintain competitiveness in the digital landscape.
Experts emphasize the importance of Naver’s response to the evolving AI landscape, urging the company to strike a balance between optimizing existing services and embracing AI-driven initiatives. The impact of AI on search engines underscores the need for continuous innovation and strategic foresight to navigate the shifting technological landscape effectively.
In conclusion, the convergence of AI and search engines represents a pivotal moment for companies like Naver, prompting strategic reflection and adaptation to stay ahead in an increasingly AI-driven digital ecosystem. The evolving dynamics of the tech industry underscore the imperative for companies to embrace innovation and leverage AI capabilities to remain competitive and relevant in a rapidly changing market environment.
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