JPMorgan has increased its target for the South Korean Kospi index and is advising investors to add to positions on market dips, maintaining its highest exposure stance on the country's stock market.

The firm's strategists noted in a report that this move stems from their constructive outlook on artificial intelligence and the earnings of related hardware companies. They added that there remains further room for retail buying activity to increase.

The strategists indicated that profits from technology companies involved in AI data center construction have now grown large enough to exert an impact at the macroeconomic level, providing a wealth boost to businesses, households, and the government.

JPMorgan's bullish scenario target implies a potential 77% upside for the Kospi index from Wednesday's closing level of 8,471.02 points.

The bank also raised its base case and bear case targets for the index to 12,500 points and 8,000 points, respectively.