Goldman Sachs' The 720 focuses on China's macro easing, the AI demand chain, and opportunities across multiple markets

Overview

This is a Goldman Sachs global multi-theme research compilation covering China's macro policy outlook, global inflation and interest-rate views, and stock and industry perspectives across AI infrastructure, consumer, entertainment, medical CDMO, metals and mining, payments, and cement. The macro section emphasizes slowing Chinese economic growth and weak domestic demand, expecting policymakers to adopt stronger easing language and accelerate the use of fiscal resources. The global macro section argues that improving inflation will ultimately outweigh geopolitical risks in driving policy rates higher.

Core views

Key views include: First, China's second-quarter real GDP growth slowed to 3.6% qoq annualized, requiring faster use of RMB800bn in policy financial instruments and remaining government bond quotas to support Goldman Sachs' 4.6% full-year real GDP growth forecast. Second, improving inflation in major global economies will push policy rates below market pricing, although short-term bond and equity markets may be constrained by Middle East escalation and a correction in elevated AI valuations. Third, AI infrastructure remains a cross-sector investment theme, driving demand for copper foil, optical modules, server power supplies, and data center power equipment. Fourth, most stock views are positive, but the report remains selective given domestic pricing pressure, raw-material inflation, industry commoditization, and regulatory risks.

Analysis framework

The report uses a macro-to-micro framework: it first assesses the market environment through GDP, fiscal impulse, inflation, policy rates, and geopolitical risks, then analyzes specific assets based on industry supply and demand, channel checks, competitive positioning, company earnings forecasts, target-price revisions, and catalysts. For individual stocks, investment conclusions primarily incorporate 12-month target prices, ratings, earnings forecast revisions, management guidance, industry share, capital expenditure trends, and M&A impacts.

Methodology notes

• Equity factor analysisGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs calculates normalized rankings using metrics including forecast sales, EBITDA, EPS, ROE, ROCE, CROCI, and valuation multiples, and converts them into percentiles relative to the market and industry peers to compare stock characteristics.

• M&A probability assessmentM&A Rank

  Probability tiers for acquisition targets

  Goldman Sachs ranks covered companies by their potential acquisition probability from 1 to 3. Rank 1 represents a 30%-50% high probability, rank 2 a 15%-30% medium probability, and rank 3 a 0%-15% low probability. For companies ranked 1 or 2, an M&A component may be incorporated into the target price.

• Macroeconomic policy assessmentChina Macro Policy Easing Framework

  Growth-target gap and fiscal resource deployment

  The report assesses the need for policy easing through real GDP growth, fiscal impulse, external shocks, weather disruptions, and divergences between domestic and external demand, while monitoring the disbursement pace of existing fiscal tools and government bond quotas.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China macro assets

  Repricing between expectations for policy easing and slowing growth

  Strengths

  Potential fiscal resources can still be disbursed more rapidly, and the policy meeting may adopt stronger easing language.

  Weaknesses

  Domestic demand is weak, the fiscal impulse is negative, and external shocks and weather disruptions are intensifying growth pressure.

  Comparison

  High-tech exports have shown relative resilience, diverging from weak domestic demand.

  Risks

  The central government may be overly optimistic about base effects, local implementation may be constrained, and policy execution may be insufficient.

• China data center power equipment

  Affected by overseas UPS demand, 800VDC commercialization, and domestic cloud providers' capital expenditure

  Strengths

  Overseas expansion and next-generation product launches provide growth opportunities; Kstar's Buy rating is maintained.

  Weaknesses

  Domestic energy-storage cost pressure, rising SG&A, raw-material inflation, and local pricing pressure weaken profitability.

  Comparison

  Kstar benefits relatively more from overseas UPS and 800VDC; Kehua faces pressure from energy-storage costs and expenses; Megmeet's server power momentum is offset by costs.

  Risks

  Foreign-exchange headwinds, domestic price competition, and lower-than-expected cloud-provider capital expenditure.

• Eoptolink

  AI capital expenditure is driving demand for 800G and 1.6T optical modules

  Strengths

  The midpoint of 2Q26 net profit guidance was 44% above expectations, while product-mix upgrades and capacity expansion support upward earnings revisions.

  Weaknesses

  Dependent on the ramp-up of high-speed optical modules and improvements in optical-chip supply.

  Comparison

  AI server optical-module demand is stronger than that of the traditional communications chain.

  Risks

  Supply bottlenecks easing less than expected, slower AI capital expenditure, or product-price pressure.

• Mitsui Kinzoku

  Beneficiary of high-end copper foil demand for AI server PCBs

  Strengths

  Holds approximately 80% global share in top-tier HVLP4 and above grades, with solid technological advantages and major-customer relationships.

  Weaknesses

  The share price previously declined sharply on concerns about intensifying competition.

  Comparison

  The report believes its high-end copper foil advantages remain intact relative to competitors in Taiwan and mainland China.

  Risks

  Intensifying competition, slower-than-expected capacity expansion, and fluctuations in AI server demand.

• Kweichow Moutai

  Pricing power in premium baijiu and recovery in channel prices

  Strengths

  The unexpected second price increase for Feitian demonstrates pricing power and may support wholesale prices ahead of the Mid-Autumn Festival.

  Weaknesses

  The macro consumption environment remains under pressure.

  Comparison

  Relative to the industry, Moutai's retail demand and wholesale price trends are more resilient.

  Risks

  Weaker channel feedback, demand pressure after the price increase, and weak macro consumption.

• Copper

  A commodity asset positioned between physical tightness and macroeconomic pressure

  Strengths

  China's visible cathode inventories fell to 167kt, while constrained scrap-copper circulation is supporting demand for refined-copper rod.

  Weaknesses

  The macro backdrop is unfavorable, and prices are affected by interest rates and geopolitical risks.

  Comparison

  The AI power and grid demand narrative is strengthening, but current tightness is driven more by restricted scrap-copper circulation and US import demand than by a surge in end demand.

  Risks

  Escalation of the Middle East conflict could trigger inflation and rate-hike concerns, potentially weighing on prices.

Key data

• China second-quarter real GDP3.6% qoq annualizedGoldman Sachs views this as a significant slowdown and believes it increases downside risks to the full-year growth target.
• China's full-year government growth target4.5%-5%The report believes stronger policy support is needed to reduce the risk of missing the target.
• Goldman Sachs China full-year real GDP forecast4.6%The forecast depends on accelerated disbursement of existing fiscal resources.
• Unused policy financial instrumentsRMB800bnViewed as one potential source of fiscal support.
• Moutai target priceRmb1,667The 12-month target price was raised following the second price increase for Feitian.
• Mitsui Kinzoku target price¥62,600Buy maintained, with emphasis on global share and technological advantages in high-end HVLP4 and above copper foil.
• Kstar target priceRmb67Buy maintained, although 2026E net profit was lowered by 2% due to foreign-exchange headwinds.
• Kehua target priceRmb35Neutral maintained, with 2026-2030E net profit lowered by 5%.
• Megmeet target priceRmb112Neutral maintained; server power momentum is offset by raw-material inflation.
• Samsung Biologics acquisition valueCHF1.46bnProposed all-cash acquisition of 100% of PolyPeptide, accelerating expansion in multimodal CDMO.
• HYBE target priceW300,000Buy maintained, although the target price was lowered and the K-pop valuation framework reset.
• JYP target priceW51,000Rating downgraded to Neutral because earnings are more concentrated in mature IP and growth expectations are more moderate.
• Jindal Stainless target priceINR 1,000Initiated with a Buy rating, benefiting from structural growth in Indian stainless steel demand.
• Eoptolink target priceRmb633The midpoint of 2Q26 net profit guidance was 44% above Goldman Sachs' expectation, driven by the ramp-up of 800G and 1.6T products.
• One 97 Communications target priceRs1,500Raised from Rs1,430; 1QFY27 revenue grew 28% year over year and EBITDA was 20% above expectations.
• Ultratech Cement target priceRs13,500Raised from Rs13,160; 1QFY27 EBITDA/t and volume growth exceeded expectations.
• US core PCE inflation breadth6 on a weighted basis, 2 on an unweighted basisMeasured on a scale where 0 represents the 1990-2019 historical average and 10 represents the 2022 pandemic peak.
• China visible copper cathode inventories167ktAt the bottom of the seasonal range, reflecting tightness in the physical market.

Impact & implications

For portfolios, expected policy easing in China and improving global inflation may ease pressure on some risk assets, but geopolitical escalation, elevated AI valuations, and interest-rate expectations could still limit near-term market upside. At the industry level, continued AI capital expenditure is spilling over into demand for optical modules, copper foil, server power supplies, data center power, copper, and power grids. Consumer, payments, cement, and Indian stainless steel are more dependent on company execution, market share, and structural demand.

Risks

• The scale or pace of China's policy easing or implementation may fall short of expectations.
• Escalation in the Middle East could raise inflation and interest-rate expectations, weighing on bond and equity performance.
• AI-related stocks have elevated valuations and could correct in the near term, weighing on market risk appetite.
• Data center power equipment faces domestic pricing pressure, raw-material inflation, foreign-exchange headwinds, and rising expenses.
• A rapid increase in humanoid robot dexterous-hand suppliers could create commoditization risks.
• Copper prices face downside risks from macroeconomic weakness and conflict escalation.
• Earnings forecasts and target prices for individual stocks depend on management guidance, demand ramp-up, M&A integration, and the regulatory environment.

What to watch

• Whether the July Politburo meeting signals stronger easing language.
• The actual disbursement pace of the RMB800bn in policy financial instruments and remaining government bond quotas.
• Whether US core PCE inflation breadth declines as expected in the fourth quarter.
• Whether a correction in AI-related stock valuations affects market risk appetite.
• Chinese cloud providers' capital expenditure, overseas UPS demand, and progress in 800VDC commercialization.
• Shipments and value contribution from Eoptolink's 800G, 1.6T, and silicon photonics products.
• Whether Mitsui Kinzoku announces large-scale VSP capacity expansion at its 1Q earnings meeting.
• Wholesale prices and channel feedback following Moutai's price increase.
• Closing of Samsung Biologics' acquisition of PolyPeptide and the impact of consolidation in FY2027.
• Copper inventories, scrap-copper circulation, US import demand, and developments in the Middle East conflict.