"8,000 Is Achievable": Why Domestic and Global Securities Firms Are Raising KOSPI Forecasts

KOSPI has finally reached the long-awaited '7,000-point milestone,' setting a new chapter in the history of the Korean stock market. This is the result of Korean companies emerging as key beneficiaries amid the sweeping transformation brought by the artificial intelligence (AI) revolution. The market now anticipates that the semiconductor super-cycle will continue into next year, making a climb to 8,000 points for the KOSPI more than plausible.

According to the financial investment industry on May 6, despite the ongoing war between the United States and Iran and persistently high international oil prices, the stock market has risen thanks to surging AI-driven demand for memory semiconductors. According to the Ministry of Trade, Industry and Energy, Korea's semiconductor exports last month soared by 173.5% year-on-year to reach USD 31.9 billion. This is the second-highest monthly export figure on record, following USD 32.8 billion in March. Semiconductors have set record-high monthly performances for 13 consecutive months.

On the 6th, when the KOSPI surpassed 7,300 points, employees were celebrating in the dealing room of KB Kookmin Bank in Yeouido, Seoul. Photo by KB Kookmin Bank, Yonhap News Agency

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As investment in AI servers expands, prices for advanced memory semiconductors such as high-bandwidth memory (HBM), DDR5, and NAND flash have skyrocketed, resulting in a surge in exports. Compared to a year ago, contract prices for memory semiconductors have soared: DDR4 8Gb by 870%, DDR5 16Gb by 662%, and NAND 128Gb by 766%, each driving up total export value. The Export-Import Bank of Korea predicts that, riding the semiconductor super-cycle, Korea's exports in the second quarter will increase by about 30% year-on-year.

Sanghyun Park, Senior Specialist at iM Investment & Securities, stated, "Unlike previous periods of high oil prices, the main reason the KOSPI index can stage such a strong rally is the semiconductor trade surplus, which more than offsets the oil deficit," adding, "Even if high oil prices persist, considering the semiconductor industry cycle, there is significant room for the trade surplus to expand further, which will sustain strong upward momentum for both the Korean economy and the stock market."

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The semiconductor super-cycle has further increased the contribution of Samsung Electronics and SK hynix to the KOSPI’s broad rally. According to Meritz Securities, from the beginning of the year through April, Samsung Electronics and SK hynix alone contributed KRW 427 trillion, or 90.8%, of the KRW 472 trillion increase in expected KOSPI earnings. The two companies are forecast to account for 70.7% of KOSPI's expected net profit this year and 42.2% of its market capitalization. From January last year to the end of April this year, the KOSPI rose by 4,241 points, with Samsung Electronics and SK hynix together accounting for 53% of the gains.

As the favorable conditions for the semiconductor industry are expected to continue, there is ample room for further KOSPI gains. Both domestic and global securities firms are raising their upper-end forecasts for the index. Among global investment banks, JPMorgan last month set its KOSPI target at the 8,500 level, while Goldman Sachs and Nomura are projecting 8,000 points. Among domestic securities firms, Shinhan Investment & Securities raised its upper forecast to 8,600, Hana Securities set it at 8,470, and Samsung Securities at 8,400.

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As the semiconductor industry enters a prolonged boom, record-breaking performances are expected, while analyses suggest that the KOSPI remains undervalued, raising the likelihood of further gains.

AI server shipments are up 28% year-on-year, more than double the overall server market’s growth rate, while memory inventory has dwindled to just 1-2 weeks’ supply, hovering at historic lows. This supply shortage is expected to push up DRAM and NAND flash prices by 250% and 187%, respectively, compared to last year.

KB Securities projects that KOSPI operating profit this year will reach a record-high KRW 866 trillion, a 182% increase from last year, led by Samsung Electronics and SK hynix. Their combined operating profit is expected to reach KRW 586 trillion-about five times higher than TSMC’s KRW 129 trillion (the world's 11th largest)-yet their combined market capitalization still falls far short of TSMC's KRW 2,869 trillion, indicating a significant undervaluation relative to performance. Samsung Electronics is expected to achieve KRW 488 trillion in operating profit next year, becoming the global leader in operating profit. SK hynix is also projected to record KRW 358 trillion in operating profit next year, ranking third worldwide.

The ripple effects of AI are rapidly spreading beyond semiconductors to the broader industrial ecosystem. In particular, global big tech firms are expected to invest around USD 650 billion in capital expenditures this year, a year-on-year surge of more than 70%, signaling a structural industry overhaul that goes far beyond a simple theme.

Indeed, AI-driven power infrastructure is drawing attention. The explosive expansion of data centers has led to soaring electricity demand, establishing ultra-high-voltage transmission network expansion and transformer upgrades as pillars of mid- to long-term growth. In addition, the machinery and shipbuilding sectors are cited as hidden beneficiaries of AI-related infrastructure investment. Demand for construction and mining equipment is recovering, especially in emerging markets, while the shipbuilding industry is seeing new opportunities as energy transition for AI infrastructure operations drives increased investment in LNG and offshore plants.

Defense and finance also serve as key pillars supporting the KOSPI’s fundamentals. The rise in defense demand due to expanding global geopolitical risks is boosting earnings visibility, while the financial sector is securing both downside stability and profitability thanks to increased stock trading volume and strengthened shareholder return policies.

Ultimately, analysts say the current market is in a performance-driven rotational rally, with semiconductors at the forefront and warmth spreading to power infrastructure, machinery, and finance. These comprehensive industrial sectors, now established as core partners in the AI ecosystem, are each demonstrating their own performance momentum, propelling the KOSPI to a new leap forward.

The unsung hero behind KOSPI’s record-breaking rally has been the government's robust efforts to reform the capital market’s structure. Institutional reforms directly targeted chronic issues long blamed for the so-called 'Korea discount,' such as opaque corporate governance and indiscriminate, fragmented dual listings, providing a decisive turning point for foreign investor sentiment.

Notably, three rounds of amendments to the Commercial Act have completely changed market practices. In July last year, the expansion of 'directors’ duty of loyalty to shareholders' from the 'company' to 'the company and shareholders' provided a legal framework for management to prioritize the interests of minority shareholders over those of large shareholders. In August of the same year, mandatory cumulative voting for large listed companies and the expanded separate election of audit committee members were implemented. This February, a law was enacted requiring companies to retire treasury shares within one year of acquisition.

These institutional innovations have gone beyond rhetoric, resulting in increased dividends and more aggressive shareholder return policies. This has become a powerful catalyst for a large influx of global funds into the Korean market, which previously had the lowest valuation among major global stock markets. The combination of solid semiconductor performance and government-driven institutional reforms has been the key driver lifting the KOSPI out of its undervalued slump.

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Experts point out that the KOSPI remains undervalued relative to performance and that there is ample room for further gains based on sector-specific earnings momentum.

Hyo Seob Lee, Research Fellow at the Korea Capital Market Institute, stated, "From the perspective of forward price-to-earnings ratio (PER), the KOSPI is still below 10 times, and with strong performance in semiconductors, defense, and shipbuilding, there is further upside from a valuation perspective." He added, "U.S. tech stocks’ earnings forecasts continue to rise, and compared to global companies like Micron and TSMC, Korean semiconductor firms remain undervalued." He emphasized, "Korea still has strong appeal for real estate holdings, so policies to encourage money movement-such as strengthening the stewardship code, tightening delisting rules, and improving financial taxation-should be supported over the long term."

Jihwan Yang, Head of Research at Daishin Securities, said, "Major companies’ Q1 results exceeded expectations, and optimism about a ceasefire agreement has also been reflected," adding, "Even after surpassing 7,000 points, the PER remains at about 8 times, and as earnings forecasts are sharply revised upward, the perception of cheap valuations is spreading." He continued, "The market expects the Middle East situation to be resolved by the third week of this month, but if not, the stock market could face a correction. Since the market rebounded quickly after a sharp drop in March, investors should be cautious with stocks that rose without earnings support and focus on large-cap stocks in electronics, securities, and finance."

However, there are also shadows beneath the steep rally. Margin trading loans ('bit-too') have surged with the rapid rise in the index, and the concentration of capital in specific themes or large-cap stocks may increase market volatility. According to the Korea Financial Investment Association, as of April 29, domestic margin trading credit balances reached KRW 36.0682 trillion, surpassing KRW 36 trillion for the first time ever. The credit balance jumped by 31.54% in just four months, from KRW 27.4207 trillion at the start of the year.

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