Key Takeaways
- • Goldman Sachs raised its 12-month Kospi target to 9,000 from 8,000, designating South Korea as its "highest conviction view" and top market in Asia with an overweight rating.
- • The Kospi index has surged approximately 77% year-to-date, trading around 7,400 after breaching the 7,000 level, making it one of the world's best-performing markets in 2026.
- • AI-driven demand for memory semiconductors—particularly DRAM and NAND chips used in hyperscaler data centers—is fueling the rally, with record supply shortfalls driving sharply increasing chip prices.
- • Samsung Electronics and SK Hynix, the sector leaders, are benefiting from sustained high profit prospects; Samsung recently reached $1 trillion in market capitalization.
- • Goldman expects South Korean corporate earnings growth of 300% in 2026, driven by hardware and semiconductor stocks, while contending that valuations remain modest despite the rally's magnitude.
Summary
South Korea's stock market has emerged as one of the world's most spectacular performers in 2026, and Goldman Sachs believes the momentum has further to run. In a note published in early May, the bank elevated South Korea to its top conviction play in Asia, raising its 12-month target for the benchmark Kospi index to 9,000—up from 8,000—and assigning an overweight rating. With the Kospi trading near 7,400 following a week in which it surpassed the psychologically significant 7,000 level, the index has already delivered a staggering 77% year-to-date return, positioning it among the world's hottest equity markets.
The primary engine powering this rally is robust, AI-driven global demand for memory semiconductors. South Korea dominates the global production of DRAM and NAND chips—the two semiconductor types essential for AI servers and data centers operated by hyperscalers. The sector is led by Samsung Electronics, which achieved $1 trillion in market capitalization this week, and SK Hynix. Goldman's analysts argue that despite the rally's magnitude, the market is "mispricing the durability of earnings" in memory semiconductors, citing a record supply shortfall relative to demand growth from major technology infrastructure investors.
Goldman projects semiconductor and hardware stocks will drive South Korean corporate earnings growth of 300% in 2026, suggesting substantial upside remains even after the current advance. The bank contends that South Korean equities maintain relatively modest valuations despite their exceptional performance, making them attractive on a fundamental basis. The record supply-demand imbalance in both DRAM and NAND has resulted in sharply elevated memory chip prices, underpinning the profit trajectory for dominant South Korean manufacturers. This structural tailwind—rooted in persistent global AI infrastructure investment—differentiates South Korea's rally from a conventional momentum-driven market surge, according to Goldman's assessment.
The primary engine powering this rally is robust, AI-driven global demand for memory semiconductors. South Korea dominates the global production of DRAM and NAND chips—the two semiconductor types essential for AI servers and data centers operated by hyperscalers. The sector is led by Samsung Electronics, which achieved $1 trillion in market capitalization this week, and SK Hynix. Goldman's analysts argue that despite the rally's magnitude, the market is "mispricing the durability of earnings" in memory semiconductors, citing a record supply shortfall relative to demand growth from major technology infrastructure investors.
Goldman projects semiconductor and hardware stocks will drive South Korean corporate earnings growth of 300% in 2026, suggesting substantial upside remains even after the current advance. The bank contends that South Korean equities maintain relatively modest valuations despite their exceptional performance, making them attractive on a fundamental basis. The record supply-demand imbalance in both DRAM and NAND has resulted in sharply elevated memory chip prices, underpinning the profit trajectory for dominant South Korean manufacturers. This structural tailwind—rooted in persistent global AI infrastructure investment—differentiates South Korea's rally from a conventional momentum-driven market surge, according to Goldman's assessment.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.