Goldman Sachs Slashes South Korea Kospi Target by 25% to 9,000 Amid AI Hangover

In a significant revision of its Asian equity outlook, Wall Street investment banking titan Goldman Sachs has slashed its 12-month forecast for South Korea's benchmark Kospi index from 12,000 down to 9,000, representing a sharp 25 percent reduction. The substantial target cut follows a steep market rout that has seen the Seoul index tumble more than 35 percent from its cyclical peak recorded in June. Although global investment strategists at the bank had repeatedly upgraded their Kospi targets earlier in the year, widespread investor apprehension concerning excessive artificial intelligence (AI) infrastructure capital expenditure, elevated corporate funding costs, and delayed revenue monetization has prompted an aggressive recalibration of corporate valuations across the East Asian manufacturing powerhouse.

Why Goldman Sachs Lowered Kospi Target: Navigating Market Pessimism vs Underlying Value

Led by chief equity strategist Timothy Moe, the Goldman Sachs research team adopted a calibrated, cautious stance regarding the current health of South Korean corporations and their public market pricing:

• Overdone Market Pessimism: In an analytical note issued on October 25, 2026, the bank argued that financial markets have become excessively negative concerning the underlying operational realities of domestic corporations.

• Pricing in Conservative Realities: The revised 9,000 baseline was specifically recalibrated to mirror how broader institutional markets are currently discounting company revenue streams, profit margins, and medium-term earnings profiles.

• Favorable Risk-Reward Dynamic: Despite the sharp 25 percent target reduction, Goldman Sachs stressed that prevailing price levels offer a compelling tactical buying window for patient capital, given the highly asymmetrical trade-off between downside risks and potential medium-term upside.

• Reversal of the June Euphoria: After raising the index target to 12,000 in June during the peak of global semiconductor optimism, the bank had initially resisted cutting estimates when the initial AI pullback began, but deep structural price drops have now necessitated this target adjustment.

Samsung and SK Hynix in Focus: AI Capex Scrutiny and Rising Capital Costs

Because South Korea serves as a critical bellwether for the international hardware supply chain, its equity market is intimately tied to the fortunes of heavyweight semiconductor conglomerates:

• Heavy Capital Expenditure vs Delayed Payoffs: Global tech giants have poured billions of dollars into AI data center infrastructure and high-bandwidth memory (HBM) production, but institutional investors increasingly question whether massive infrastructure commitments will translate into prompt commercial profits.

• Escalating Funding Pressures: Rising borrowing costs across capital markets have significantly increased the expense of corporate fundraising, adding pressure to cash flows and operational expansion across tech companies.

• Lack of Direct Monetization Signals: An absence of clear visibility regarding immediate AI-driven bottom-line expansions has fostered widespread caution among fund managers, triggering sustained selling that spilled well beyond Samsung Electronics and SK Hynix to hit broader domestic industrial counters.

World's Cheapest Valuations: Half of Indonesia's Multiples with 65% Chip Slump Priced In

The sustained selling pressure has compressed South Korean market multiples to historically depressed valuations relative to emerging market peers:

• Steep Valuation Discount: Having started the year as one of the most widely recommended and discussed equity markets worldwide, South Korea’s benchmark has now fallen into one of the cheapest global valuation brackets.

• Severe Peer Divergence: According to the Goldman Sachs report, equity multiples for South Korean equities have dropped to nearly half the trading valuations observed in regional peers like Indonesia.

• Extreme Semiconductor Earnings Discount: Bank strategists calculated that current share prices across Korean semiconductor manufacturers effectively price in an extreme scenario where sectoral earnings collapse by 65 percent through 2027.

Unwarranted Worst-Case Modeling: Goldman Sachs formally characterized this priced-in 65 percent earnings drop as excessively gloomy, affirming that true commercial fundamentals do not justify such deep structural market discounts.