Goldman Sachs has raised its 12-month target for Korea's benchmark KOSPI to 12,000 points, sharply upgrading its outlook less than a month after lifting the target from 8,000 to 9,000.
In a report Monday, Goldman Sachs set its KOSPI target at 12,000 and maintained an "overweight" rating, implying roughly 37% additional upside from current levels.
The investment bank said the semiconductor memory cycle will last longer than in previous cycles. "As compute demand grows faster than memory supply, memory makers have gained pricing power," the report said, adding that "high operating leverage is maximizing profits." It stressed that "Korean semiconductor stocks are trading at a forward price-to-earnings ratio of 5 times, and the market is skeptical about how long these earnings can last, but we are confident this cycle will last longer than previous ones."
Goldman Sachs also noted that the rally is not confined to the semiconductor sector. Excluding Samsung Electronics (005930.KS) and SK hynix (000660.KS), the 2026 earnings growth forecast for the remaining companies has risen to 57% currently from 20% in January this year.
Meanwhile, excessive concentration in Samsung Electronics and SK hynix was cited as a risk factor for the KOSPI. The two stocks now account for more than 50% of the KOSPI's market capitalization, and rising speculative trading by retail investors could leave the market vulnerable to short-term corrections. "Short-term corrections may come, but since they are backed by corporate earnings, such corrections would rather be a buying opportunity," Goldman Sachs said.
