Kia's Valuation Set to Rise as Physical AI Initiatives Accelerate [Click e-Stock]

On November 3, Samsung Securities raised its target price for Kia from 140,000 won to 150,000 won, up by 7.1%. The firm explained that the removal of tariff uncertainties now enables Kia to compete on equal footing with Japanese rivals, and that its partnership with Nvidia will accelerate investments in the physical AI sector, which is expected to eliminate the discount factor compared to its peer group.

Kia's preliminary third-quarter results, announced on October 31, showed strong performance with sales reaching 28.69 trillion won, an 8.2% increase year-on-year. However, due to the impact of the 25% U.S. tariff, which amounted to 1.23 trillion won, operating profit fell sharply to 1.4623 trillion won, a decrease of 49.2%.

Samsung Securities forecast that the benefits of the U.S. tariff reduction (to 15%) will materialize in December this year or from 2026, due to local inventory levels. The firm analyzed that the impact of tariff reductions for Kia next year will amount to 247 billion won, and that Kia will be more affected by the tariffs than Hyundai Motor Company.

In terms of fundamentals, Kia is capable of generating annual operating profit of 10 trillion to 10.5 trillion won. In a 15% tariff environment, its operating margin would reach 8.5-8.6%, which is significantly higher than its peer group. Lim Eunyoung, an analyst at Samsung Securities, stated, "Hyundai Motor Group has begun its AI narrative through its partnership with Nvidia," adding, "The valuation discount compared to the peer group is expected to be resolved."

Hyundai Motor Group has agreed to receive 50,000 units of Nvidia's Blackwell GPUs annually from next year through 2030. The group also plans to establish a Physical AI Application Center and a data center.

According to Nvidia, the Blackwell (GB200) has a token processing speed of 10,000 TPS (tokens per second) per GPU, which is four times faster than the Hopper (H200). As of the end of the third quarter, Tesla's U.S. data center had 120,000 GPUs, mainly H100s. Hyundai Motor Group is expected to achieve data center capabilities comparable to those of Tesla. In contrast, Chinese electric vehicle makers, due to U.S.-China tensions restricting access to high-performance chips, currently have only one-fifth to one-tenth the computing power of Tesla.

Samsung Securities expects Hyundai Motor Group's physical AI business to take concrete shape next year. At CES early next year, Boston Dynamics will unveil the third-generation humanoid E-Atlas, after which pilot testing will begin at the Meta Plant in the United States. In the third quarter of next year, the company plans to mass-produce Level 2+ autonomous driving pace cars to accumulate driving data.