JPMorgan upgrades SK Telecom to Overweight, with AI data center expansion becoming the next catalyst

Overview

This is a rating upgrade report on SK Telecom by JPMorgan. The report notes that SKT's share price has risen 69% year to date but has already pulled back 27% from its 2026 June peak, and market sentiment toward the Anthropic proxy trade has become more rational. The analysts shift the investment focus from purely the Anthropic stake to the potential value of SKT/SK Broadband in building AI data centers (AI factory), and argue that the SK Group's position in the global AI value chain, Korea's attractiveness as an AI ecosystem hub, external capital financing structures, and operating margin assumptions of around 15%–20% together form new catalysts for the stock.

Core views

The core view is that the AI-driven re-rating of SK Telecom still has room to continue and could differentiate it from traditional telecom peers. The report believes that stock-price volatility driven by the Anthropic stake may decline because optimistic expectations have already been largely reflected; by contrast, AI DC construction has not yet been fully reflected in valuation. JPMorgan therefore upgrades the rating to Overweight and raises the SoTP target price to W110,000.

Analysis framework

The report adopts a SoTP valuation by segments: the core telecom business is valued using DCF; the Anthropic stake is referenced to the latest funding-round valuation with a 30% NAV discount applied; the AI data center business and submarine cables are valued using EV/EBIT multiples, with reference to CoreWeave's market valuation and capacity targets. Financial forecasts cover FY25A to FY27E, and the analysis also incorporates share-price performance, key operating metrics, margins, cash flow, and risk disclosures.

Methodology notes

• Valuation methodsSOTP

  sum-of-the-parts valuation

  The core telecom business, Anthropic stake, AI data centers, and submarine cables are valued separately and then summed to derive the Dec-27 target price of W110,000.

• Valuation methodsDCF

  discounted cash flow

  The core telecom business is valued using DCF, and the report gives a core telecom business value of W17.6T.

• Valuation methodsEV/EBIT multiple

  enterprise value to EBIT multiple

  The AI DC business is valued by applying a 6.6x EV/EBIT multiple to 2030–2031E earnings, aligned with Bloomberg consensus multiples consistent with CoreWeave.

• asset_valueNAV discount

  net asset value discount

  The Anthropic stake is estimated based on the latest funding-round valuation, and a 30% NAV discount is applied in the SoTP to the value of the sub-0.3% holding, resulting in W3T.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SK Telecom 017670.KS

  Core covered name

  Strengths

  Rating upgraded to Overweight; target price raised to W110,000; AI DC expansion, the SK Group's position in the AI value chain, and incremental SoTP value form the main support.

  Weaknesses

  The share price has already risen sharply year to date, optimistic expectations related to the Anthropic proxy trade are already substantially reflected, and AI DC still requires large-scale funding and execution validation.

  Comparison

  The report argues that SKT's AI-driven re-rating differentiates it from traditional telecom peers such as KT and LGU+; year-to-date share-price performance is clearly ahead.

  Risks

  Slower-than-expected AI DC progress, greater-than-expected follow-on impact from the data leakage incident, and persistent regulatory pressure.

• SK Broadband

  AI DC execution platform and wholly owned subsidiary

  Strengths

  Seen as an important execution vehicle for the SK Group's AI DC factory strategy, participating in capacity planning from 5GW to 15GW.

  Weaknesses

  Project capex requirements are enormous and require support from external project financing and capital from global technology partners.

  Comparison

  The report uses CoreWeave's capacity and valuation multiples as a comparable reference for AI infrastructure.

  Risks

  Execution uncertainty exists around capacity deployment, customer demand, financing structure, and margins.

• Anthropic

  Minority equity holding and market-sentiment driver

  Strengths

  SKT holds less than 0.3% of shares, which can provide a meaningful reference for book value based on the latest funding-round valuation.

  Weaknesses

  The report believes the market may previously have been overly excited about the Anthropic proxy trade, and related optimistic expectations have already been largely priced into the stock.

  Comparison

  SKT's market capitalization has increased by about W8T year to date, compared with the implied value of its Anthropic stake, suggesting the market has already priced in part of the AI narrative ahead of time.

  Risks

  Changes in Anthropic's valuation or cooling AI sentiment could cause stock-price volatility.

Key data

• Current share priceW89,400Quoted price for 017670.KS referenced in the report on 2026-07-16.
• Target priceW110,000Dec-27 target price, raised 38% from the previous Dec-26 target price of W80,000.
• Potential upside23%Calculated based on the current price of W89,400 and the new target price of W110,000.
• Rating changeNeutral -> OverweightThe report explicitly upgrades SK Telecom to Overweight.
• Year-to-date share price performance+69%The report says SKT's year-to-date gain significantly exceeds that of KT and LGU+.
• Pullback from peak-27%SKT has fallen 27% from its 2026 June peak, versus -22% for the KOSPI over the same period.
• Anthropic stake<0.3%SKT holds less than 0.3% of Anthropic shares.
• Reference valuation for Anthropic$2.9B / W4.3TEstimated based on the latest May 2026 funding round valuation of $965B.
• Anthropic value in SoTPW3TIncluded in SoTP after a 30% NAV discount.
• AI DC and submarine cable valueW3TBased on 2030–2031E earnings and a 6.6x EV/EBIT multiple.
• Core telecom business valueW17.6TDCF-derived value of core telecom businesses such as wireless and fixed-line operations.
• Planned AI DC capacity2029–2035 5GW, long-term 15GWAI data center capacity plan recently proposed by SKT/SKBB.
• Report assumption for active AI DC capacityabout 0.5GWJPMorgan assumes SKT will reach about 0.5GW of active AI DC capacity in 2030–2031.
• AI DC unit economicsabout 15%–20% OPMThe report believes the AI DC business has attractive operating margins.
• Example funding requirement per 1GWabout W75TUsed in the report to illustrate the scale of funding required for AI DC construction, hence the expectation that the company will rely more on project financing and capital from global technology partners.
• FY26E adjusted EBITW1,932bnRaised 4.3% from the previous forecast of W1,852bn.
• FY27E adjusted EBITW2,063bnRaised 5.5% from the previous forecast of W1,955bn.

Impact & implications

The investment implication of the report is that SK Telecom's valuation narrative may shift from traditional telecom high-dividend characteristics and the Anthropic minority-stake proxy trade toward a revaluation of AI infrastructure assets. If SKT can advance AI DC construction through project financing and capital from global big-tech partners while controlling its own capital burden, the value of its AI DC business may gradually be incorporated into market valuation; however, if construction progress, customer demand, or the regulatory environment falls short of expectations, the rationale for the rating upgrade will be challenged.

Risks

• AI data center business progress is slower than expected.
• The negative impact of the data leakage incident exceeds expectations.
• Regulatory pressure persists.
• AI DC construction requires massive capital investment; if external financing or partner capital is not secured, SKT's own capital burden may increase.
• If optimistic expectations related to the Anthropic proxy trade reverse, valuation and share-price volatility may result.

What to watch

• Progress in delivering AI DC capacity at SKT/SK Broadband, especially the 5GW plan for 2029–2035 and the long-term 15GW target.
• Whether demand from global AI service providers, hyperscalers, Korean local enterprises, government agencies, and within the SK Group can translate into actual AI token demand.
• The sharing structure among project financing, capital from global big-tech partners, and SKT's own capital expenditure.
• Whether the AI DC business can achieve operating margins of about 15%–20%.
• Changes in Anthropic's latest valuation and how the market prices SKT's Anthropic stake.
• The follow-up impact of the data leakage incident and changes in Korean regulatory policy.