A Goldman Sachs Group Inc. strategist is standing by his bullish target for South Korean stocks, saying investors underestimate how long the AI boost for the nation's memory chipmakers will last. The investment bank's chief Asia Pacific equity strategist Timothy Moe maintains his target of 12,000 for the benchmark Kospi, implying upside of nearly 80% from the current level.

The optimism belies the 27% plunge in the Kospi from its June record high on concerns over the sustainability of Big Tech's AI spending boom and a surge in Korean stock volatility. Another round of stellar results from chipmakers from Samsung Electronics Co. and SK Hynix Inc. has done little to boost shares. US Big Tech spending is estimated to top $1.2 trillion next year, up sharply from prior forecasts of $800 billion.

The Goldman strategist estimates earnings growth of roughly 360% this year for Kospi members, moderating to about 35% in 2027. He says his Kospi target is based on 7.5 times forward earnings estimates. The index currently trades at 5.3 times, roughly half its seven-year average. If Korean companies achieve his earnings projections, then Moe says his 12,000 Kospi estimate "isn't as crazy as it might appear."