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This article was written by

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Nvidia Corp. will invest $1 billion in South Korean internet giant Naver Corp. to help finance a major expansion of an artificial intelligence data center under construction in the country, the company announced late Friday, adding to a sweeping wave of investment deals from the world’s most valuable company.

The funding is part of a broader $10 billion financing package that will allow Naver, one of South Korea’s largest cloud service and internet portal operators, to more than triple the size of the facility it is building at its GAK Sejong hyperscale data center in Sejong, South Korea, expanding the site from 55 megawatts to 200 megawatts of capacity by 2028. Under the terms of the agreement, Canadian asset manager Brookfield will serve as the project’s exclusive capital partner, funding up to $9 billion through a nonbinding term sheet, while Nvidia contributes the $1 billion investment and Naver covers the remaining financing needed to complete the project.

A hub for both Korean and U.S. AI development

The expanded facility will run on Nvidia’s artificial intelligence computing hardware, including its advanced Vera Rubin and Blackwell chip platforms, and is designed to give both Korean and U.S.-based AI developers access to production-scale computing power for building next-generation AI models, agents and services. The project will use Nvidia’s DSX AI factory platform, and Naver has said it intends to eventually expand its deployment of Nvidia infrastructure to a full gigawatt of capacity, a dramatic scale-up from the facility’s original footprint.

Naver founder and chairman Haejin Lee credited the new financing with accelerating the company’s broader AI ambitions, saying Nvidia’s investment and the infrastructure agreement with Brookfield had “propelled NAVER’s vision for the AI factory business into a robust execution phase.” The deal also deepens technical collaboration between the two companies, with Naver continuing development of its HyperCLOVA X AI models using Nvidia’s Nemotron open-source models and joining the broader Nemotron Coalition, a group of companies working on open AI model development.

Nvidia said its planned investment remains subject to standard closing conditions, including Naver finalizing at least $9 billion in committed financing for the project separate from Nvidia’s own contribution.

Part of a much larger Korea push

The Naver investment was announced alongside a separate, far larger commercial partnership between Nvidia and South Korea’s SK Group, which the companies described as worth more than $500 billion in total business over time. That figure includes money Nvidia will spend purchasing memory chips from SK Hynix, currently the world’s largest supplier of high-bandwidth memory used in AI systems, as well as purchases by SK Group of Nvidia’s AI supercomputers.

Nvidia also said it will work directly with SK Hynix to help design future generations of high-bandwidth memory chips, an effort aimed at securing reliable access to a component that has remained in short supply amid the global buildout of AI data centers. Separately, SK Telecom is set to build more than 2 gigawatts of AI data centers across the Korean Peninsula, an amount of power roughly equivalent to what would be needed to supply 1.5 million homes. The first of these so-called AI factories built by SK Telecom is expected to open next year.

Speaking about the broader relationship with SK Group in an interview with Bloomberg Television, Nvidia Chief Executive Jensen Huang emphasized the scale of the partnership. “So between us, we’re going to do half a trillion dollars’ worth of business,” Huang said, describing the depth of the commercial relationship between the two companies.

Timed to a high-profile diplomatic visit

Both the Naver and SK Group announcements coincided with a visit to Silicon Valley by South Korean President Lee Jae Myung, who traveled to San Francisco for an AI summit where the deals were formally unveiled. Huang, addressing the broader significance of Nvidia’s expanding footprint in the country, described the current moment as a turning point for South Korea’s technology sector. “This is the golden ages for Korea,” Huang said, pointing to the country’s semiconductor manufacturing strength and industrial base as key reasons behind Nvidia’s continued investment there.

Additional technology agreements between Korean and American companies are reportedly still being finalized as part of the broader push tied to President Lee’s visit, suggesting Friday’s announcements may not be the last major deals to emerge from the trip.

Part of a year-long investment spree

The Korea-focused deals extend a pattern of aggressive dealmaking Nvidia has pursued over the past year as it works to secure both the chip supply chains and downstream infrastructure needed to support explosive global demand for AI computing power. Nvidia’s relationship with South Korean technology companies has deepened steadily in recent months, following earlier chip supply agreements the company struck with Samsung, Hyundai and SK Group during a prior visit by Huang to the country, part of a broader effort to secure long-term partnerships across the region’s semiconductor and industrial sectors.

South Korea has separately set a goal of deploying roughly 200,000 high-performance GPUs by 2030 as part of its national AI strategy, though the country continues to face infrastructure challenges tied to energy supply and data center cooling capacity as it works to scale up its AI computing footprint.

With Nvidia’s $1 billion Naver investment still pending customary closing conditions, and Naver working to finalize the remaining $9 billion in project financing alongside Brookfield, the full scope of the Sejong data center expansion is not expected to be completed until 2028. In the meantime, the scale of Friday’s announcements — spanning direct equity investment, chip supply agreements and multibillion-dollar infrastructure commitments — underscores how central South Korea has become to Nvidia’s broader strategy for securing both chip manufacturing capacity and the physical infrastructure needed to keep pace with global AI demand.

Shares of Naver Corp. fell nearly 6% in Seoul trading Friday, even as the South Korean internet giant unveiled a landmark $10 billion investment package with Nvidia Corp. and Brookfield Corp. to dramatically expand its artificial intelligence data center infrastructure — a reaction that underscored growing investor anxiety over how the company plans to finance its ambitious AI buildout.

Naver stock closed at 207,500 won, down 12,500 won, or 5.68%, on the Korea Exchange. The decline came on the same day the company formally announced the financing agreement with Nvidia and Brookfield in San Francisco, a deal that would more than triple the size of an AI data center under construction at Naver’s GAK Sejong hyperscale facility, expanding it from 55 megawatts to 200 megawatts of capacity by 2028.

A deal investors met with skepticism rather than enthusiasm

Under the terms of the agreement, Brookfield agreed to a nonbinding term sheet to provide up to $9 billion as the project’s exclusive capital partner, while Nvidia committed to investing $1 billion directly into Naver, with Naver responsible for funding the remainder of the roughly $10 billion project. Despite the scale of the commitment, market analysts pointed to the financing structure itself as a likely source of investor unease. Raising several billion dollars in external financing typically requires either significant new debt or equity dilution, a dynamic that can weigh on existing shareholders even when the underlying investment is viewed as strategically sound.

Naver’s stock had already been trading well below its 52-week high of 304,000 won heading into Friday’s session, and the latest decline pushed shares closer to the lower end of their 52-week range of 181,100 won to 304,000 won. The stock had fallen more than 8% over the trailing 12 months even before Friday’s drop, reflecting a broader period of pressure on the company’s valuation.

Broader tech selloff added to the pressure

Naver’s decline also came amid a rougher session for technology stocks across Asia and the United States. SK Hynix, one of South Korea’s largest chipmakers and a key Nvidia memory supplier, fell 3.5% in Seoul trading the same day, following a Bloomberg report that the company had fully exhausted its cap on converting locally held shares into U.S.-listed depositary receipts. In the U.S., the tech-heavy Nasdaq Composite dropped 0.64% Friday as chip stocks broadly weighed on the index, even as the S&P 500 closed nearly flat and the Dow Jones Industrial Average gained on strength in Apple shares. Nvidia’s own stock has faced volatility in recent sessions as well, with some reports noting the chipmaker’s shares have declined even following positive AI infrastructure announcements, as investors increasingly focus on evidence of returns from major AI spending commitments rather than the announcements themselves.

Naver’s chairman frames the deal as transformative

Despite the market’s muted reaction, Naver’s leadership struck a notably optimistic tone about the partnership. Speaking at the AI summit in San Francisco where the deal was announced, Naver founder and chairman Lee Hae-jin described the scale of the investment in stark terms. “This time, Nvidia and Brookfield have invested a large sum of $10 billion in us,” Lee said, characterizing the deal as an opportunity for the company to make a significant leap forward. He added that the partnership would help Naver scale up its data center operations more quickly by leveraging the global reach and expertise of both Nvidia and Brookfield, beyond simply providing capital.

According to reporting from Seoul Economic Daily, Lee and Naver Chief Executive Choi Soo-yeon traveled to Brookfield’s headquarters in Toronto earlier in the week to finalize details of the AI infrastructure investment and financing arrangement ahead of Friday’s announcement.

Execution risk remains front and center

Analysts tracking the deal have flagged several risks that could explain investor caution, even setting aside financing concerns. Brookfield’s $9 billion commitment remains structured as a nonbinding term sheet rather than a finalized agreement, and Nvidia’s own $1 billion investment is subject to standard closing conditions, including Naver successfully finalizing the remaining financing separate from Nvidia’s contribution. The expanded facility also needs to become operational on a relatively tight timeline, with the 200-megawatt buildout targeted for completion by 2028 in a global AI infrastructure market that continues to shift rapidly as demand patterns evolve.

Some analysts have also pointed to Naver’s broader strategic positioning as an added source of complexity. The company has separately been pursuing a roughly $10.3 billion acquisition of a cryptocurrency exchange, a move that would fold a fast-growing but heavily regulated business into a traditional internet and technology conglomerate at the same time it is undertaking its largest AI infrastructure commitment to date.

Long-term outlook remains more optimistic than the stock reaction suggests

Even with Friday’s decline, most analysts covering Naver maintain a bullish long-term outlook on the stock. Coverage from multiple research firms shows an overwhelming majority of analysts rating the stock a “buy,” with average 12-month price targets well above current trading levels — in some cases suggesting upside of more than 50% from Friday’s closing price. That gap between near-term market sentiment and longer-term analyst expectations suggests investors may be drawing a distinction between the strategic merits of the Nvidia and Brookfield partnership and the near-term financial mechanics of how Naver intends to pay for its share of the project.

With the deal still pending finalized financing terms and regulatory and closing conditions still to be worked through, Naver’s next scheduled earnings report, expected in early August, is likely to draw close attention from investors looking for more clarity on how the company plans to fund its portion of the AI infrastructure buildout. Until those details become clearer, Friday’s stock reaction suggests the market remains more focused on the financing risk embedded in the deal than on the long-term strategic upside Naver’s leadership has emphasized publicly.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of NVDA, AMD, TSM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

This article was written by

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.