Goldman Sachs remains bullish on the South Korean stock market: Driven by the AI memory boom, with a potential upside of up to 80%.

According to Jinshi Finance APP, Goldman Sachs strategist Timothy Moe maintains his bullish target for the South Korean stock market, believing that investors are underestimating how long artificial intelligence (AI) will continue to benefit domestic memory chip manufacturers. The Chief Asia-Pacific Equity Strategist at Goldman Sachs is maintaining a 12,000-point target for the South Korean KOSPI benchmark index, implying nearly 80% upside from current levels. When first presented three months ago, this forecast was already one of the most optimistic on Wall Street.

“We still stand by this assessment—the core driver is our belief that earnings will materialize as expected,” Moe said in an interview last Friday. “The market is underestimating the duration of this earnings cycle.”

This optimistic view contrasts with the reality that the KOSPI index has retreated 27% from its June record high, reflecting market concerns about the sustainability of the AI investment boom among tech giants and a sharp rise in the volatility of South Korean equities. Despite chip giants such as Samsung Electronics and SK Hynix reporting strong financial results, these have had limited effect in boosting share prices.

However, a global race to build data centers is causing a severe shortage of memory and storage chips, driving up prices—Moe expects this supply-demand dynamic to become even more acute by 2027. He noted that U.S. tech giants' capital expenditure is expected to surpass 1.2 trillion dollars next year, a substantial increase from prior forecasts of 800 billion dollars.

“Even if they’re not making money, hyperscale companies must continue investing,” Moe pointed out. “This is extremely favorable for the memory industry, as it drives demand for computing power, which itself is highly dependent on memory.”

Goldman strategists estimate that KOSPI constituent stocks’ earnings will rise about 360% this year, slowing to about 35% in 2027. He added that the expectation for earnings growth to eventually decelerate has been fully priced in by the market.

Moe also acknowledged potential risks such as competition from Chinese rivals and the possibility of political resistance to U.S. data center construction, but believes that over the next two to three years, fundamentals will continue to favor advanced memory chip manufacturers.

He stated that his KOSPI target is based on a forward price-earnings ratio of 7.5 times. The index's current P/E ratio is just 5.3 times, about half the average for the past seven years.

If South Korean companies can achieve their earnings forecasts, Moe said his 12,000-point KOSPI target is “not as unrealistic as it might seem.”