Goldman Sachs Cuts South Korea's Kospi 12-Month Target by 25% as AI Trade Concerns Intensify

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As market concerns about AI trading intensify, Goldman Sachs Group strategists cut their target for South Korea's Kospi index by 25%. This is the bank's first significant cut this year after multiple upward revisions.

Analysts including Timothy Moe lowered the index's 12-month target from 12,000 points to 9,000 points, citing the need for more conservative valuation assumptions after the benchmark index fell more than 35% from its June high. The strategists believe the selloff has left Korean stocks severely undervalued, and the revised target still implies more than 60% upside from current levels.

Goldman Sachs analysts last raised their Kospi target in June. Even as the global AI stock selloff that began later that month dragged down index constituents, the bank kept its target at 12,000 points.

Chipmaking giants such as Samsung Electronics and SK Hynix have made South Korea's Kospi a bellwether for the AI trade. Investors are increasingly worried about whether the industry's massive infrastructure spending can be sustained, with financing costs rising and few signs that these investments can generate sufficient returns. The related selling pressure has spread to the broader Korean stock market.

"The market is pricing in an overly negative fundamental outlook," Goldman Sachs strategists wrote in an October 25 report. They said the target cut was intended to "incorporate more conservative assumptions about how the market may value the relevant fundamentals, but we still believe the risk-reward at current levels is attractive."

South Korea's stock market has gone from the hottest major market this year to the cheapest in the world, with its valuation falling to about half that of Indonesia's stock market. Compiled data show that the Kospi's forward 12-month price-to-earnings ratio has fallen to about 4 times. This is the first time such a low valuation has appeared among 18 markets since 2006. The market's capitalization exceeded $1 trillion in early 2026.

Goldman Sachs strategists estimate that current semiconductor stock valuations imply a 65% decline in the sector's 2027 earnings, but the bank considers this scenario overly pessimistic. Stocks outside the memory chip industry account for about half of the index and currently trade at a forward P/E of 7.6 times.

Despite the latest target cut, Goldman Sachs remains bullish on power, industrial and corporate governance-related stocks, as well as companies benefiting from domestic reflation and Korean pop culture. news_keyword_pub,usstock,GS iframe below body iframe below body General statement General statement QR code at end start QR code at end start

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