Goldman Sachs has slashed its 12-month target for South Korea's Kospi index by 25%, cutting the benchmark to 9,000 from 12,000, according to a note reported by Bloomberg on Saturday. The bank cited mounting concerns over the sustainability of the AI trade and said it was adopting more conservative valuation assumptions for Korean equities.
The move is one of the clearest signs yet that Wall Street's conviction in AI-linked equities is eroding — and it lands on one of the markets most exposed to that trade. The Kospi is dominated by memory chipmakers Samsung Electronics and SK Hynix, two of the largest suppliers of the high-bandwidth memory that fuels AI data centers worldwide. When sentiment on AI infrastructure spending turns, Seoul feels it faster and harder than almost any other major index. For more context on this story, see our ongoing artificial intelligence updates.
A Rapid Reversal From a Former Bull
What makes the cut striking is how quickly Goldman's position has swung. The bank most recently raised its Kospi target in June and held firm at 12,000 even as a global AI selloff gathered pace later that month.
In early August, Goldman doubled down, arguing that Korea's AI-stock selloff had "gone too far" and keeping its 12,000 target — a level that at the time implied roughly 80% upside. The bank called the plunge a correction rather than the start of a longer drawdown, and urged investors to stay overweight Korean chips.
As late as September 23, Goldman strategists were still telling clients the Kospi was primed for a "tactical breakout." Four weeks later, the target sits at 9,000.
The sequence of calls — raise, hold, double down, breakout, cut — reads as a case study in how quickly the narrative around AI investing has deteriorated over the past quarter. Korean financial commentary noted that even after the reduction, Goldman still sees more than 60% upside from current levels, framing the bank's new stance as market-driven caution rather than outright capitulation.
Why Korea Became the Bellwether
South Korea's index has effectively become a leveraged bet on the AI buildout. Samsung and SK Hynix together account for a disproportionate share of the Kospi's market capitalization, and both companies' fortunes are tied directly to hyperscaler capital spending on AI data centers.
That concentration cuts both ways. It made the Kospi one of the world's best-performing major markets during the AI boom, and it now makes the index the most visible casualty as investors question whether AI infrastructure spending can generate returns that justify its cost.
The strains are already showing in corporate decisions. SK Hynix scrapped the planned IPO of its Solidigm storage subsidiary this week, according to a report from ZeroHedge, a pullback that market commentators linked to the worsening environment for AI-linked listings.
Goldman's note reportedly points to concerns over the "sustainability" of the AI funding cycle — a reference to growing worries that the enormous capital commitments behind data centers, chips, and power infrastructure depend on financing conditions that may not hold. Analysts have spent recent weeks flagging debt-funded AI buildouts, circular vendor financing, and the gap between AI revenue and AI capital expenditure as the market's key vulnerabilities.
Broader Cracks in the AI Trade
The Kospi cut does not stand alone. Goldman economist Alberto Cavallo's research team has argued that AI has delivered little measurable payoff outside the technology sector, a view the economist reiterated in comments carried by Bloomberg this weekend. Earlier this month, the bank also cut its view on other AI-exposed Asian markets as the selloff deepened.
The mood shift extends beyond sell-side research. Labor market data released in recent days show early signs of AI-related hiring headwinds in the United States, adding a macro dimension to what began as a valuation debate.
For Korean policymakers, the timing is uncomfortable. The country has positioned itself as an indispensable supplier to the AI boom, with the government backing massive memory and foundry investment programs. A sustained repricing of AI equities would compress the funding available for exactly those projects.
What Investors Are Watching Next
The immediate test for the AI trade is the coming earnings season. Memory chip pricing, hyperscaler capital expenditure guidance, and any evidence of AI revenue catching up to AI spending will determine whether Goldman's more conservative stance proves prescient or prematurely defensive.
Even the bank's reduced target implies substantial recovery. A 9,000 Kospi with more than 60% implied upside is not a bear call in absolute terms — it is a statement that the easy gains are over and that the market's direction now depends on AI monetization becoming real rather than promised.
For now, though, the direction of travel is unmistakable. The banks that spent two years telling investors to buy every AI dip are starting to lower their targets — and Seoul, the purest play on the AI hardware cycle, is where the reassessment is showing up first.
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