Goldman Sachs' KOSPI Target Takes a "High-Dive": Cut from 12,000 to 9,000 Points, Still Insists on 60% Upside

Goldman Sachs strategists cut the 12-month target for South Korea's KOSPI index from 12,000 to 9,000 points, a 25% reduction. The bank had previously raised the target multiple times this year. The cut stems from heightened market concerns over the artificial intelligence (AI) trade. Analysts led by Timothy Moe said in an October 25 report that they adopted more conservative valuation assumptions after the KOSPI fell more than 35% from its June peak. However, the strategists believe the selloff has left Korean equities significantly undervalued, and the revised target still implies more than 60% upside from current levels. Goldman Sachs' most recent upward revision to its KOSPI target came in June this year, and it maintained the 12,000-point target even as a subsequent global AI selloff dragged down index constituents. Chipmaking giants such as Samsung Electronics and SK Hynix have made the KOSPI a bellwether for the AI trade. Investors are increasingly worried about the sustainability of the sector's massive infrastructure spending, rising financing costs, and signs of insufficient returns, with selling pressure having spread to the broader Korean market. Goldman Sachs strategists wrote in the report: "The market is pricing in an overly negative fundamental outlook." They said the target cut was made to incorporate "more conservative assumptions about how the market may price underlying fundamentals," but they still believe "at current levels, the market offers attractive risk-reward." Korean equities have gone from this year's hottest major market to the world's cheapest, with valuations falling to roughly half those of Indonesia. Compiled data show that the KOSPI's 12-month forward price-to-earnings ratio has fallen to about 4x; among the 18 markets tracked by Bloomberg, the last time such a valuation was seen was in 2006. The index's market capitalization exceeded $1 trillion in early 2026. Goldman Sachs strategists estimate that current semiconductor valuations imply a 65% decline in the sector's 2027 earnings, a scenario they view as overly pessimistic. The non-memory chip sector accounts for about half of the KOSPI index, with a forward price-to-earnings ratio of 7.6x. Despite the latest target cut, Goldman Sachs remains bullish on power, industrial, and corporate governance-related stocks, as well as companies benefiting from South Korea's domestic reflation and Korean pop culture.