JPMorgan on Thursday raised its year-end target for South Korea’s KOSPI index, citing strength tied to artificial intelligence and a broad data center buildout. The bank described the outlook as "directionally bullish," while acknowledging that local market volatility has picked up.
In its update, JPMorgan increased the KOSPI year-end target to 12,500 points from 9,000 points. The new target equates to a gain of nearly 48% from the KOSPI’s close on Wednesday. The firm also published a bull case scenario in which the index reaches 15,000 points by the end of 2026.
JPMorgan said South Korea remains its most preferred market in the region and tied that preference to the outsized influence of AI-related demand on local chipmakers. The KOSPI has led global indices in 2026, rising more than 100% this year amid a sharp rally in domestic memory semiconductor names. The surge has been centered on memory giants SK Hynix Inc (000660) and Samsung Electronics Co Ltd (005930), which JPMorgan said have benefited from strong memory demand coming from the AI industry.
The bank framed its positive stance around a continuation of that trend. It argued that growth in sectors adjacent to AI - including industrials involved in the broader data center ecosystem - could add further momentum to the market. JPMorgan also suggested that improvements in corporate governance would help channel those gains into the financial sector and support the index more broadly.
"It is noteworthy that the earnings of the Tech names participating in the AI datacenter buildout are now large enough to be meaningful at a macro level, creating a wealth boost not just for corporates and households, but even for the government," JPMorgan wrote in a note.
Even as the bank highlighted structural upside, it cautioned that elevated volatility and forced foreign selling were likely to persist. JPMorgan noted that foreign investors had withdrawn a record $95 billion from Korea so far in 2026, characterizing the market as "a victim of its own success."
Against that backdrop, JPMorgan identified a balancing force in domestic retail participation. The bank observed that retail traders still have discretionary capacity to buy, a dynamic that could act as a catalyst for further gains if buying resumes at scale.
The update underscores how concentrated earnings gains among a handful of large technology and memory companies are now significant enough to influence the broader market narrative. While JPMorgan’s revised targets reflect optimism about continued AI-driven demand and a sustained buildout of data center capacity, the firm explicitly recognized the twin tensions of outsized market moves and material foreign outflows.
Context for investors - The bank’s forecast raises the KOSPI target substantially while mapping a clear upside scenario should the AI-driven cycle continue. The degree to which retail buying can offset foreign selling, and the persistence of elevated volatility, will be key dynamics to monitor as the market digests earnings flows and capital movements.