Goldman Slashes Kospi Forecast by 25% as AI Valuations Cool

Goldman Sachs strategist Tim Moe has taken a sharp knife to his forecast for South Korea's Kospi index, lowering the target by 25%. The reason is less about the companies on the index than about the price investors are willing to pay for them. Moe points to a shrinking growth multiple on AI-linked stocks, along with a pickup in volatility, as the forces behind the revision.

The adjustment matters because the Kospi has become a useful proxy for the wider artificial intelligence trade. A large share of its market value sits with memory chipmakers and hardware suppliers that sell into the AI data center buildout, so the index tends to move with expectations for that spending. When investors start paying less for each dollar of expected AI earnings, stocks like these feel it quickly, and the index can fall even if the underlying business outlook has not changed much.

Volatility is the other half of the story. Higher swings make it harder to justify the premium multiples that momentum-driven AI names have commanded, and they push institutional investors to demand a bigger margin of safety before adding exposure. That dynamic can feed on itself: a few weak sessions raise hedging costs, which prompts further selling, which lifts volatility again.

For investors, the revision is a reminder that a strategist's index target is only as good as the assumptions behind it. A 25% cut from a major global bank will get attention on trading desks in Seoul and beyond, but the forecast does not by itself signal a collapse in Korean equities. It says that the easy part of the AI rally, where rising expectations lift every valuation, may be behind the market, and that returns from here may depend more on actual earnings delivery than on sentiment.

Watch the next few earnings cycles from the large Korean chipmakers, along with any shift in how global funds price AI exposure. Those will show whether the multiple compression Moe describes is a temporary reset or the start of a longer repricing.