By Kwanwoo Jun


Kakao shares rallied, tracking gains in U.S. tech stocks on Friday, on market hopes for an earnings boost from the company's artificial-intelligence push.

The South Korean mobile-internet company stock surged 14% to 50,300 won, equivalent to $36.98, in Monday afternoon trade, outperforming the benchmark Kospi's 1.3% gain and staying on course for the largest daily gain in more than two years.

Kakao led broad gains in local tech shares, including its digital-banking and online-payment affiliates KakaoBank and Kakaopay, following the tech-heavy Nasdaq's 1.2% gain on Friday.

The advance of Kakao reflects growing market expectations that its continued AI push--especially in cooperation with U.S.-based ChatGPT developer OpenAI--should boost its earnings and revenue growth.

The San Francisco-based AI company plans to set up an office in Seoul in the coming months as it expands business partnerships with local firms, including Kakao, which operates the most popular messaging service in South Korea.

Seoul-based KB Securities analyst Lee Sun-hwa, in a recent note, raised her target price for Kakao by 12% to 55,000 won and her 2025 operating-profit forecast by 5.8%, expecting the Korean company to jointly develop and launch a "Korean-style super AI agent platform" with the U.S. startup in the second half of the year.

Lee also expects Kakao to revamp its mobile-messaging app KakaoTalk, which is used by around 90% of smartphone users in South Korea, to enhance user traffic and encourage content consumption for better advertising and other business opportunities.

Hanwha Investment & Securities analyst Kim So-hye said Monday she expects Kakao's operating profit to jump 15% in 2025 and 24% in 2026, with its earnings likely to improve gradually on new advertising products and favorable core-business environments.

Goldman Sachs has upgraded the South Korean stock market to overweight from marketweight, noting that the new Seoul government appears more growth-oriented than investors expected. The U.S. bank was upbeat on the Lee Jae-myung administration's supportive fiscal policy and large-scale investments in AI and other strategic industries.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

06-09-25 0214ET