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Tech Investor Dan Niles: AI Revenue Slowdown Demands Stock Picking

Credited to Bloomberg$ · bloomberg.com20h ago

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Niles Investment Management Founder and veteran tech investor Dan Niles says competition from open-source models is weighing on token prices and slowing revenue growth at leading artificial intelligence companies. He argues that steeper financing costs and postponed public…

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Kakao Targets AI Break-Even in 2028 as Q3 Profit Rises 7%

Credited to TheElec · thelec.net · 13h ago

Kakao expects its artificial intelligence (AI) business to reach break-even in 2028 as it improves profitability. The company plans to accelerate monetization of AI agent-based advertising and commerce while managing rising investment and operating costs as AI service usage expands.

“Starting in 2027, we will accelerate growth in our existing advertising and commerce businesses through new monetization models using AI agents,” Kakao chief financial officer (CFO) Shin Jong-hwan said during the company’s third-quarter 2026 earnings call on Nov. 5. “By 2028, AI revenue will account for a double-digit share of Talk Biz revenue, and profitability will improve to the break-even point.”

Kakao chief executive officer (CEO) Chung Shin-a emphasized KakaoTalk’s competitive advantages in the AI market. She explained that while global AI agents must connect with external platforms such as email, calendars and messaging services to deliver personalized experiences, KakaoTalk already contains extensive information about users’ daily lives and social relationships.

“I am confident KakaoTalk will become a space where users and AI agents communicate,” Chung said. “Once AI can understand users’ intentions and context within conversations, it will generate new advertising demand without requiring direct searches and enable more sophisticated ad recommendations.”

Kakao also outlined its strategy to reduce AI service operating costs. The company plans to process simple user requests directly on devices such as smartphones while handling more complex tasks on servers using high-performance AI models.

Chung said Kakao would develop its proprietary Kanana model into a multimodal model capable of understanding images and audio. For complex tasks, the company will selectively use its own flagship model and external high-performance AI models.

Shin also said Kakao is pursuing a strategy of using GPU cloud services rather than directly purchasing large numbers of graphics processing units (GPUs). The company aims to prevent AI-related investment and operating costs from increasing proportionally with user growth.

Kakao reported third-quarter consolidated revenue of 2.0867 trillion won and operating profit of 240.3 billion won, up 6% and 7%, respectively, from a year earlier. Compared with the previous quarter, revenue declined 1% and operating profit fell 13%.

Platform revenue rose 17% year on year to 1.235 trillion won, driving overall growth. Talk Biz revenue, which includes KakaoTalk advertising and commerce, increased 13% to 632.9 billion won.

Talk Biz advertising and subscription revenue grew 11% to 391.5 billion won. Talk display advertising revenue jumped 35%, supported by an influx of new advertisers and an expanded product lineup. Commerce revenue increased 16% to 241.3 billion won.

Gross merchandise value (GMV) across Kakao’s Gift and Talk Store services reached 2.3 trillion won. Gift recorded its highest-ever monthly transaction value in September 2026, driven by Chuseok holiday demand and increased purchases for personal use. Other platform revenue, including mobility and payments, rose 21% to 602.1 billion won.

Kakao’s AI business continued to incur investment costs ahead of monetization. The AI services division within Kakao’s standalone operations posted a third-quarter operating loss of 64 billion won, widening by 7 billion won from 57 billion won in the previous quarter.

Kakao plans to launch a pilot service for its AI assistant, Kanana Space, in December 2026 and officially release Everyone’s AI and Kanvas by the end of 2026.

Shin also forecast that Kakao would achieve its full-year targets of 10% consolidated revenue growth and an annual operating profit margin exceeding 10%.