JPMorgan Strategist Dismisses AI Bubble Concerns, Predicts Further Gains for Korean Stocks Next Year

Kerry Craig, Managing Director at JPMorgan Asset Management, dismissed recent concerns about an AI bubble in equity markets during an interview on Thursday and forecast further gains for Korean stocks next year.

"Right now, you're seeing some worries spreading about capital expenditure levels, but I absolutely don’t think this is a bubble," Craig said.

He explained that most funding currently comes from corporate cash reserves rather than debt, and unlike the dot-com bubble, actual demand and strong earnings prospects justify the investments.

Craig's remarks come amid growing concerns about an AI bubble in the U.S., as investors worry about American tech firms increasingly relying on debt to finance large-scale projects aimed at expanding AI-related infrastructure.

On Thursday, Oracle’s shares plunged after reporting quarterly revenue below market expectations. In September, the company raised about $18 billion through bond issuance to invest in a major AI data center.

"You can look back at the internet and fiber-optic expansion. There was massive investment in all that fiber—it took years to be absorbed, but it was absorbed," Craig noted, adding that AI adoption rates remain "very low."

He expects the AI-driven rally in U.S. stocks to continue but at a slower pace than this year.

Aligning with this trend, Craig anticipates "fairly favorable" conditions for Korean equities next year.

As long as the U.S. economy grows, AI demand will persist and spill into Asian markets—particularly South Korea, he said. As a major producer of memory chips and semiconductors, Korea plays a "critical" role in the AI supply chain.

Craig does not view the Korean market as "overvalued" relative to others. A weaker U.S. dollar, coupled with Korea’s diverse tech sector spanning shipbuilding to defense, could support the KOSPI next year.

On the USD/KRW exchange rate, Craig expects it to stabilize around 1,400 next year, citing overseas investors’ currency hedging on Korean stocks and narrowing interest rate differentials between Korea and the U.S.

However, the strategist cautioned that yen weakness may pressure the won downward, as the two currencies often move in tandem.