Goldman Sachs Group strategist Timothy Moe is holding firm on his optimistic outlook for South Korean equities, arguing that Wall Street is undervaluing the longevity of the artificial intelligence-driven boom for domestic memory chip manufacturers.

The firm's chief Asia-Pacific equity strategist is maintaining his target of 12,000 points for the benchmark KOSPI index, which implies a rally of nearly 80% from current levels. When this projection was introduced three months ago, it already ranked among the most bullish calls on Wall Street.

"We remain committed to this view, as the fundamental driver is our conviction that the earnings will actually materialize," Moe said in an interview last Friday. "The market is currently underestimating how long this earnings cycle will persist."

This confident stance stands in sharp contrast to the reality that the KOSPI has fallen 27% from its June record high, pressured by growing concerns over the sustainability of massive AI investment spending by tech giants and a sharp spike in volatility across the South Korean market. Although chip heavyweights such as Samsung Electronics and SK Hynix have once again delivered impressive earnings reports, these results have done little to boost their stock prices.

Meanwhile, the global race to build data centers is triggering a severe shortage of memory and storage chips, which is driving prices higher. Moe anticipates this supply-demand imbalance will intensify further by 2027. He noted that capital expenditures from major U.S. technology companies are projected to exceed $1.2 trillion next year, a substantial upward revision from the previous forecast of $800 billion.

"Even if they are not generating profits, these hyperscalers are compelled to keep investing," Moe pointed out. "This is extremely favorable for the memory industry, as it drives demand for computing power, which in turn is heavily dependent on memory."

The Goldman Sachs strategist projects that earnings for KOSPI-listed companies will surge by approximately 360% this year, before moderating to around 35% by 2027. He added that the eventual slowdown in earnings growth is an expectation that has already been fully priced into the market.

Moe acknowledged potential risks, including competitive pressure from Chinese rivals and possible political hurdles to U.S. data center construction, but he believes that the fundamentals will remain advantageous for advanced memory chip manufacturers over the next two to three years.

He stated that his KOSPI target is based on a forward price-to-earnings ratio of 7.5 times. The index currently trades at just 5.3 times forward earnings, roughly half of its seven-year average. If South Korean companies manage to deliver on their earnings projections, Moe argues that his 12,000-point target for the KOSPI "is not as far-fetched as it may appear."