"Stick with the winners": Goldman expects the rally among memory manufacturers to continue
Instead of shifting focus to underperforming sectors of the Asian stock market, the bank recommends focusing on chipmakers, whose supercycle has not yet been fully priced in
In the second half of the year, investors should focus on the strongest players in the Asian market. Photo: ioda/Shutterstock
In the second half of the year, investors should focus on the strongest players in the Asian market, according to Goldman Sachs, as reported by CNBC. The bank’s analysts identified the semiconductor memory market as one of the most promising sectors. In their view, the growth cycle in this sector—driven by high demand for memory chips for data centers and AI infrastructure—has not yet been fully priced in, even given this year’s strong rally.
Details
In its outlook for the Asian stock market for the second half of the year, Goldman Sachs urged investors to “stick with the winners,” according to CNBC. Analysts note that stocks are currently rising in value due to strong growth in companies’ actual earnings, rather than simply because of inflated market valuations. According to the investment bank, nearly 80% of the region’s market returns since the start of the year have been driven by earnings growth or upward revisions to earnings forecasts. Therefore, Goldman advises against shifting to underperforming sectors and instead recommends focusing on sector leaders.
"The supercycle in the semiconductor memory market is one of the most powerful and noticeable trends, which has not yet been fully priced in," according to the bank's analysts.
Memory chips have become one of the key components of AI infrastructure, as they are used in computing accelerators and servers for training and running large language models. The increased demand for these chips has caused a shortage, allowing manufacturers to sharply raise prices. All of this has propelled key market players—the U.S.-based Micron Technology, as well as South Korean giants Samsung Electronics and SK Hynix—into the ranks of the main beneficiaries of the AI boom. Since the start of the year, Micron and SK Hynix shares have quadrupled in price, while Samsung’s stock has surged by 170%. However, such a rapid rise has made these stocks extremely sensitive to any shifts in sentiment surrounding AI, notes Bloomberg.
What Does the Bank Expect from Asian Stocks?
The bank reaffirmed its recommendation to buy stocks in Northeast Asia, favoring the markets of South Korea, Taiwan, Japan, and mainland China. Goldman analysts expect the MSCI Asia Pacific ex-Japan Index, which reflects the state and dynamics of the stock market across the entire region excluding Japan, will post returns of around 15–17% in the second half of the year, supported by projected earnings growth of 60% in 2026 and 22% in 2027.
What else is Goldman betting on?
Among other promising areas for investment, Goldman Sachs highlights mechanical engineering, the banking sector, capital-intensive industries, and select Chinese assets. At the same time, analysts emphasize that the key drivers of growth in the Asian IT market—the development of artificial intelligence, the expansion of energy infrastructure, and defense spending—are simultaneously making investments in commodities more attractive.
According to the investment bank’s strategists, geopolitical shocks only reinforce long-term demand for metals and energy infrastructure, so investors should continue to diversify into commodity assets. This remains true even despite the drop in oil prices following the resumption of shipping through the Strait of Hormuz, CNBC emphasizes.
"We believe that a war in Iran would primarily bolster factors driving demand for electricity and metals rather than for oil and gas," the investment bank wrote.
The growing focus on energy security and electrification will continue to drive demand for industrial metals, including lithium and aluminum, as well as investment in power grids and power generation. Analysts are particularly bullish on copper: the bank expects demand for it to outpace production for many years to come, driven by the accelerated construction of data centers, the expansion of power grids, the growth of renewable energy, the electric vehicle market, and the defense industry.
Gold remains another favorite at Goldman. Strategists reaffirmed their forecast that the precious metal will reach $4,900 per ounce by the end of 2026. This implies a 21% increase from current levels. Analysts cited sustained purchases by central banks in emerging markets—which are seeking to reduce their reliance on traditional reserve assets—as the main driver of growth.
This article was AI-translated and verified by a human editor
