Goldman Sachs Just Cut Its KOSPI Target by 25%

Goldman Sachs cut its 12-month target for South Korea's KOSPI index by 25% on Sunday, October 25, 2026 — to 9,000 from 12,000 — yet still argues the market offers more than 60% upside from current levels, because the sell-off has made Korean stocks the cheapest among major global markets. The downgrade, reported by Bloomberg and covered the same day by the Seoul Economic Daily and Aju Press, lands after the KOSPI has fallen more than 35% from its June peak on growing doubts about whether massive AI spending will pay off.

What happened

Goldman Sachs strategists, in a report dated October 25, lowered their 12-month KOSPI target to 9,000 from the 12,000 level they had set just four months earlier. That is a 25% cut — a sharp reversal for a bank that had raised its Korea target repeatedly earlier this year as the AI trade powered the market higher.

The strategists said they applied more conservative assumptions to how investors will value Korean corporate fundamentals after the benchmark's slide of more than 35% from its June high. The index now sits near 5,550, so even the reduced 9,000 target implies upside of more than 60% from here — a detail that explains why the headline cut is not a bearish call on Korea.

Why it's blowing up

The KOSPI was the world's hottest major market earlier this year, carried by semiconductor heavyweights Samsung Electronics and SK Hynix, whose memory chips sit at the center of the global AI data-center build-out. That same concentration is now working in reverse. As investors question the profitability of AI infrastructure spending — the same AI-financing anxiety that knocked U.S. tech stocks sharply lower on Thursday — Korean chip stocks have led the decline.

The result is a valuation collapse that is drawing attention far beyond Seoul. The KOSPI's forward price-to-earnings ratio — share prices measured against expected earnings over the next 12 months — has fallen to about 4 times. According to Bloomberg data cited in the coverage, that is the lowest forward P/E among 18 major global stock markets, at a level not seen since 2006. In Goldman's reading, current semiconductor share prices already reflect expectations that sector profits will fall 65% by 2027 — a scenario the bank's strategists describe as excessively pessimistic. Stocks outside the memory-chip sector, which make up roughly half the KOSPI, trade at a forward P/E of just 7.6 times.

Key facts

New target: 9,000 for the KOSPI over 12 months, down from 12,000 set four months ago — a 25% cut (Goldman Sachs report, October 25, via Bloomberg).
The fall: The KOSPI is down more than 35% from its June 2026 peak and trades near 5,550.
Implied upside: Even after the cut, the 9,000 target implies more than 60% upside from current levels, and Goldman says Korean equities remain attractive on a risk-reward basis.
Valuation: Forward P/E of about 4x — the lowest among 18 major global markets tracked by Bloomberg, a level last seen in 2006; non-memory stocks trade at 7.6x forward earnings.
What Goldman still likes: Power and industrial stocks, companies tied to corporate-governance reform, and firms set to benefit from a recovery in domestic demand and the global spread of Korean pop culture.

What's next

Korea's market now becomes a live test of the global AI trade. Samsung Electronics and SK Hynix earnings — and any fresh evidence on whether AI data-center spending is producing returns — will decide whether the KOSPI's 4-times-earnings valuation is a warning sign or, as Goldman argues, an overdone discount. The call also lands in a heavy week for global markets: the Federal Reserve decides rates on Wednesday, October 28, the same day Microsoft and Alphabet report, with Amazon following on Thursday. If AI spending guidance disappoints there, the pressure on AI-linked markets like Korea is unlikely to lift quickly; if it holds up, the world's cheapest major market will be first in line for a re-rating debate. This post reports what happened and how markets reacted — it is not investment advice.

Sources

FAQ

What did Goldman Sachs do to its KOSPI target?

On October 25, 2026, Goldman Sachs cut its 12-month KOSPI target by 25%, to 9,000 from 12,000, applying more conservative valuation assumptions after the index fell more than 35% from its June peak.

Why did the KOSPI fall so sharply?

The decline was driven mainly by semiconductor stocks such as Samsung Electronics and SK Hynix, as investors questioned whether heavy AI infrastructure spending will deliver sufficient profits.

Is Goldman Sachs bearish on South Korean stocks?

No. Despite the target cut, Goldman says the sell-off has left Korean stocks deeply undervalued — the reduced 9,000 target still implies more than 60% upside, and the bank calls the market attractive on a risk-reward basis.

How cheap is the Korean stock market now?

The KOSPI trades at a forward price-to-earnings ratio of about 4 times expected earnings — the lowest among 18 major global markets tracked by Bloomberg, at a level not seen since 2006.

Goldman Sachs Just Cut Its KOSPI Target by 25% — And Still Sees 60% Upside