Goldman Sachs insists on boosting the Korean stock market: Driven by the AI memory boom, potential increase of 80%

The Zhitong Finance App learned that Goldman Sachs Group strategist Timothy Moe (Timothy Moe) insisted on his bullish target for the Korean stock market, believing that investors have underestimated the duration of artificial intelligence (AI) benefits for domestic memory chip makers. The chief stock strategist at Goldman Sachs Asia Pacific maintains the target point of 12,000 points in Korea's benchmark KOSPI Index, which means there is room for growth of nearly 80% compared to the current level. When the forecast was presented three months ago, it was already one of Wall Street's most optimistic predictions.

“We still stick to this judgment—the core driving force is that we believe profits will be realized as scheduled,” Mo said in an interview last Friday. “The market is underestimating the duration of this profit cycle.”

This optimism contrasts with the reality that the KOSPI index has fallen 27% since its record high in June. The reason behind this is market concerns about the sustainability of tech giants' AI investment boom and the sharp rise in the volatility of the Korean stock market. Although chip giants such as Samsung Electronics and SK Hynix have once again handed over impressive financial reports, their impact on boosting stock prices is limited.

However, the global data center race is causing a serious shortage of memory and memory chips, driving up their prices — this supply and demand pattern is expected to intensify further in 2027. He said that the capital expenditure of US tech giants is expected to exceed 1.2 trillion US dollars next year, which is a sharp increase from the previous forecast of 800 billion US dollars.

“Even if they don't make money, hyperscale enterprises must continue to invest,” Mo pointed out. “This is extremely beneficial to the memory industry because it will drive demand for computing power, which itself is highly dependent on memory.”

Goldman Sachs strategists expect the profit growth rate of KOSPI constituent stocks to be about 360% this year and slow to about 35% in 2027. He added that the expectation that profit growth will eventually slow down has been fully digested by the market.

At the same time, Mo acknowledged risk factors such as potential competitive pressure from Chinese rivals and possible political resistance to US data center construction, but he believes that within the next two to three years, fundamentals will still benefit advanced memory chip manufacturers.

He said its KOSPI target is based on a forward price-earnings ratio of 7.5 times. The index's current price-earnings ratio is only 5.3 times, which is about half of the past seven-year average.

If South Korean companies can meet their profit forecasts, their 12,000 point KOSPI target is “not as unrealistic as it seems.”