[Special Stock] Krafton Posts Strong Earnings Amid Gaming Industry Downturn... "DeepSeek Beneficiary"

Krafton's stock price showed strong performance in early trading. This is interpreted as a result of expectations that Krafton will record its highest-ever earnings despite the downturn in the gaming industry, as well as its emergence as a beneficiary of the China-originated 'DeepSeek shock.'

As of 9:07 a.m. on the 31st, Krafton's stock price was trading at 355,000 KRW, up 3.5% (12,000 KRW) from the previous close. During the session, it surged nearly 5% to 359,500 KRW, setting a new 52-week high.

Krafton's flagship intellectual property (IP) game, 'Battlegrounds,' has been a huge hit, bringing the company close to surpassing 1 trillion KRW in annual operating profit for the first time since its founding. Hanwha Investment & Securities projected Krafton's revenue last year at 2.7702 trillion KRW and operating profit at 1.2335 trillion KRW.

The internet and gaming sectors were also identified as beneficiaries of the DeepSeek shock, which further improved investor sentiment. Earlier, China's AI company DeepSeek shocked the market by launching 'R1,' a cost-effective AI model with performance comparable to OpenAI's GPT-4 but with significantly reduced development costs. The expectation that AI model training could be possible even with relatively limited high-performance graphics processing units (GPUs) led to a 17% plunge in NVIDIA's stock price.

Seungho Choi, a researcher at Sangsangin Securities, explained, "The reason DeepSeek shocked the world is that it implies that overwhelmingly high computing resources may not be necessary to implement high-performance models," adding, "They suggested that the combination of gaming and high-performance AI would occur next year, and if things continue as they are, opportunities will come in the near future."

Researcher Choi identified the internet and gaming sectors as beneficiaries of the DeepSeek shock and maintained an 'Overweight' rating. He named Krafton as the biggest AI beneficiary in the gaming sector and Naver as the beneficiary in the internet sector.