Goldman Sachs Cuts Kospi 12-Month Target by 25 Percent as Artificial Intelligence Trade Unravels

October 25, 2026 – Wall Street investment bank Goldman Sachs reduced its 12-month target for South Korea's benchmark Kospi index by 25 percent on Sunday, slashing its forecast from 12,000 to 9,000 index points.

The sharp valuation downgrade follows a protracted equity selloff that saw the Kospi tumble more than 35 percent from its June peaks amid mounting skepticism surrounding artificial intelligence hardware monetization.

For macroeconomic allocators, the recalibration highlights how severe multiple compression in global semiconductor manufacturing hubs can rapidly reverberate across broader emerging market equities.

Trading desks observe that despite the headline target reduction, the revised 9,000 forecast still implies more than 60 percent upside potential from current depressed market levels.

Semiconductor Valuations and Earnings Scenarios

Goldman Sachs strategists led by Timothy Moe emphasized that global financial markets are currently pricing an excessively negative fundamental outlook into South Korean technology leaders.

The bank's quantitative models indicate that current valuations effectively discount a massive 65 percent contraction in aggregate semiconductor earnings for 2027.

Analysts designated that projection as overly pessimistic, pointing out that non-memory equities, which constitute approximately half of the index weighting, currently trade at 7.6 times forward earnings.

Overall, the Kospi's 12-month forward price-to-earnings ratio has collapsed to roughly 4 times, marking the lowest valuation multiple recorded across 18 major international stock markets since 2006.

Asset managers note that South Korea has shifted rapidly from one of the world's top-performing equity destinations earlier in 2026 to one of its absolute cheapest, with headline valuations falling to nearly half those of regional peers.

Sector Positioning and Market Bottom Prospects

Despite cutting index targets to accommodate more conservative valuation multiples, Goldman Sachs reiterated that the risk-to-reward ratio for South Korean equities remains highly attractive.

The brokerage highlighted persistent long-term capital opportunities across domestic power infrastructure, industrial, corporate governance beneficiaries, and cultural export sectors.

Simultaneously, domestic institutions in Seoul point toward stabilizing technical patterns across key technology heavyweights including Samsung Electronics and SK Hynix.

Analysts at KB Securities noted that the Kospi appears to be forming a double-bottom technical foundation after holding critical cyclical troughs established in late July and mid-October.

Equity funds project that near-term price discovery will hinge directly on semiconductor capital expenditure visibility and central bank liquidity conditions as markets head into November.