South Korea’s equity market is poised for further gains as a once-in-a-generation surge in semiconductor earnings reshapes Asia’s investment landscape, according to Goldman Sachs Research.

“Korea is our highest-conviction view,” writes Timothy Moe, Goldman Sachs Research’s chief Asia Pacific regional equity strategist. “Our forecast of earnings growth this year at 300% is the strongest for any market in Asia ever, with the exception of the 1999 recovery from the Asian Financial Crisis, when many economies and profits were initially devastated.”

Our strategists raised their 12-month KOSPI target to 9,000 (from 8,000 previously) and lifted their broader MSCI Asia Pacific ex-Japan (MXAPJ) target to 990 (from 920).

Korean and Taiwanese stocks have surged, exceeding their peaks before the Iran war. By contrast, Southeast Asian markets, such as Indonesia and the Philippines, remain well below the levels seen before the ongoing Middle East conflict. The divide reflects how energy-importing economies have absorbed the recent oil shock, even as technology-led markets are riding a powerful semiconductor upswing.

What is driving the Korean earnings boom?

Korea is benefitting from a supercycle in semiconductor memory, in which record supply shortfalls for memory chips and accelerating demand from hyperscale cloud investment and AI-related compute are pushing memory prices sharply higher. Since memory producers carry high operating leverage, those price gains translate into outsized bottom-line growth.

Memory manufacturers’ shift toward three- to five-year long-term supply agreements should keep profitability elevated for longer than the market is currently pricing, according to Goldman Sachs Research. Korean semiconductor stocks still trade at single-digit price-to-earnings multiples—a level that suggests earnings durability is not yet reflected in share prices.

Are Korean stocks overvalued?

The KOSPI trades at about seven times forward earnings, a level Goldman Sachs Research considers inexpensive on both a price-to-earnings and a price-to-book versus return-on-equity basis. Korea’s Value Up corporate governance program is progressing, supporting expectations that the country’s longstanding valuation discount will gradually narrow. Portfolio positioning across foreign, retail, and domestic institutional investors is also relatively balanced, leaving room for additional incremental investment.

In Taiwan, technology accounts for more than 80% of the index weight, and it remains one of the clearest examples of the AI hardware cycle. Goldman Sachs Research forecasts earnings growth of 45% in 2026 and 28% in 2027 (compared with 38% and 25%, respectively, for consensus estimates).

Goldman Sachs Research strategists also expect opportunities in China’s domestic A-shares. Consensus 2026 earnings growth has been revised up to 23%, reflecting a shift from 41 months of producer price deflation to modest reflation. They are also optimistic about Japanese equities amid the country’s stable politics and foreign inflows of $48 billion year-to-date. For India’s stock market, Goldman Sachs Research forecasts 8% and 13% profit growth in 2026 and 2027—well below consensus expectations of around 16% in both years—as higher energy and currency costs weigh on margins.

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