A strategist at Goldman Sachs is standing by its bullish outlook for the South Korean equity market, suggesting investors are underestimating how long the AI-driven surge in demand for domestic memory chip producers might last.

Timothy Moe, the investment bank's chief Asia-Pacific equity strategist, maintained his 12,000-point target for the Kospi index, which implies a potential gain of nearly 80% from current levels. This projection, initially unveiled three months ago, was already among the most optimistic on Wall Street at the time.

In an interview on Friday, Moe reaffirmed his conviction, citing expectations that corporate earnings will deliver as forecast. He highlighted that the market is currently undervaluing the duration of the current earnings upcycle.

Despite this confidence, the Kospi has fallen roughly 27% since hitting an all-time high in June. The selloff has been fueled by concerns over whether major tech firms can sustain their substantial AI spending, along with a sharp spike in volatility within the Korean market. Even robust quarterly results from chipmakers like Samsung Electronics and SK Hynix have done little to buoy share prices.

However, a global race to build data centers has created a severe shortage of memory and storage chips, driving up prices. Moe anticipates this trend will only intensify through 2027. He pointed to projections that capital expenditure from major US tech companies will exceed $1.2 trillion next year, a significant upward revision from the prior estimate of $800 billion.

Moe argued that hyperscalers are compelled to keep investing even if they are not yet profitable. This dynamic is highly beneficial for the memory sector, as it drives compute demand, which in turn requires massive amounts of memory. The Goldman strategist forecasts that Kospi component companies will see earnings growth of roughly 360% this year, before moderating to about 35% in 2027. He added that the market has fully factored in the eventual deceleration of this earnings growth pace.