Goldman Sachs 2H26 APAC Technology Strategy: Tight Memory Supply Extends, AI and Physical Assets Remain Preferred Themes

Overview

This is Goldman Sachs' The 720 multi-theme strategy research report covering APAC and global markets. It focuses on the 2H26 APAC technology investment strategy, Samsung Electronics earnings views, initial coverage of SPCX and InnoScience, Japanese industrial electronics, Chinese consumer staples, Indian metals and pharmaceuticals, Korean batteries, the U.S. technology AI profit pool, the global HALO strategy, and Saudi capital expenditure. Rather than providing an in-depth study of a single company, the report compiles cross-industry and cross-regional strategy and selected-stock views.

Core views

The core view is that market volatility will remain high in 2H26, requiring technology allocations to distinguish between risk-on and risk-off scenarios. In risk-on conditions, the preference is for memory, MLCCs, electronic materials, silicon wafers, analog/power semiconductors, and AI data center-related supply chains with tight supply and demand and rising prices. In risk-off conditions, the preference is for defensive companies capable of gaining new business opportunities from AI disruption. On the consumer side, demand is weak but costs are improving, creating structural opportunities for value retail channels. Globally, Goldman Sachs believes capital-intensive assets have completed a relative re-rating, and returns in the next phase will depend more on earnings delivery and differentiation among companies.

Analysis framework

The report combines thematic strategy with individual-stock ratings, mapping macro and industry signals to specific stocks. The technology section tracks tight supply and demand, prices, capacity, HBM, GaN, AI data center power, and the diffusion of electronic materials. The consumer section tracks monthly sales, costs, channel structure, and margins. The industrial and capital expenditure sections focus on valuation gaps, orders, capacity utilization, fixed-cost leverage, and national strategic investment.

Methodology notes

• Stock Strategyrisk-on/risk-off stock selection

  Selecting stock portfolios according to market risk-appetite scenarios

  Against the backdrop of high volatility in 2H26, the report distinguishes between rising- and declining-risk-appetite environments. Risk-on favors assets with tight supply and demand and earnings elasticity, while risk-off favors defensive companies with new business opportunities created by AI.

• Fundamental FactorsGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factor profile

  The Goldman Sachs factor profile compares stocks' positions relative to the market and industry peers using standardized rankings for growth, financial returns, and valuation multiples. The composite factor is the average of growth, financial returns, and inverse valuation multiples.

• M&A AssessmentM&A Rank

  Grading the likelihood of mergers and acquisitions

  Goldman Sachs uses a qualitative and quantitative framework across its global coverage to assess the probability that a company will be acquired. M&A rank 1 represents high probability, rank 2 medium probability, and rank 3 low probability. Rank 1 or 2 may be reflected in target-price considerations.

• Global StrategyHALO

  Heavy Assets, Low Obsolescence

  HALO favors heavy-asset companies with low obsolescence risk. The report argues that, amid high real interest rates and supply-chain restructuring, the return drivers for capital-intensive stocks will shift from valuation re-rating to earnings delivery.

Asset mapping & comparison

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

• Samsung Electronics

  Beneficiary of the DRAM and HBM upcycle

  Strengths

  Better-than-expected DRAM profitability, volume and price growth potential in HBM, and long-term customer agreements and tight supply and demand support earnings power.

  Weaknesses

  Smartphone margins are pressured by rising memory costs, and the report mentions a provision for a one-off special bonus for semiconductor employees.

  Comparison

  A core beneficiary within the APAC technology strategy as tight memory supply and demand broaden.

  Risks

  Falling memory prices, weak smartphone demand, and slower-than-expected HBM ramp-up.

• InnoScience

  Beneficiary of rising GaN penetration in AI data center power

  Strengths

  Demand for 800 VDC ultra-high-power-density systems is driving GaN adoption in AI data center power. Capacity expansion and product-mix upgrades support scale advantages.

  Weaknesses

  Growth expectations depend on delivery of a high CAGR and capacity expansion, creating relatively high capital expenditure and execution risks.

  Comparison

  Compared with traditional power semiconductors, the investment thesis is more concentrated on upgrades to AI data center power architecture.

  Risks

  Lower-than-expected GaN penetration, slower data center investment, and insufficient capacity utilization.

• Space Exploration Technologies Corp

  Space, connectivity, and AI infrastructure platform

  Strengths

  A vertically integrated, low-cost infrastructure services position; the report expects multiple markets to become trillion-dollar opportunities over a five-year horizon.

  Weaknesses

  High capital intensity and long-term revenue forecasts create valuation and execution uncertainty.

  Comparison

  Introduced as a new Buy-rated coverage name, distinct from traditional technology hardware companies, with businesses spanning space, connectivity, and AI.

  Risks

  Launch cadence, regulation, capital expenditure, competition, and long-term revenue delivery.

• Panasonic

  Beneficiary of demand for battery backup units in data centers

  Strengths

  Competitive battery backup units supported by strong data center demand.

  Weaknesses

  Currently trades at a valuation discount to AI peers and requires fundamental delivery for a re-rating.

  Comparison

  The report considers it undervalued relative to AI peers.

  Risks

  Slower data center demand, intensifying competition, and a persistent valuation discount.

• Japan Steel Works

  Beneficiary of energy demand and critical-component supply chains

  Strengths

  Global supply constraints for gas turbines and nuclear power components, alongside significantly raised guidance for materials and engineering businesses.

  Weaknesses

  Industrial machinery guidance was lowered due to slowing demand for EV battery separator equipment.

  Comparison

  Benefits from energy-equipment supply bottlenecks among Japanese industrial assets.

  Risks

  Slower energy investment, weaker-than-expected price improvement, and continued weakness in industrial machinery.

• China Consumer Staples

  Structural defensive and channel opportunity amid weak consumption

  Strengths

  June sales improved month on month; declining PET and oil prices eased cost pressure, while value retail remained the fastest-growing channel.

  Weaknesses

  Overall consumer sentiment remains weak, traditional retail channels continue to soften, and companies remain cautious about broad-based price increases.

  Comparison

  Value retail and selected leading snack companies outperform companies with greater exposure to traditional channels.

  Risks

  Slower-than-expected demand recovery, intensifying channel competition, and renewed cost inflation.

• HALO stocks

  Global strategy preference amid high real interest rates and supply-chain restructuring

  Strengths

  Heavy-asset and low-obsolescence characteristics benefit from capital expenditure in data centers, semiconductors, utilities, and defense.

  Weaknesses

  Capital-intensive stocks have significantly outperformed light-asset stocks, narrowing the valuation gap.

  Comparison

  The report believes the next phase will depend less on re-rating and more on earnings delivery and differentiation among individual stocks.

  Risks

  A slowdown in the capital expenditure cycle, insufficient earnings delivery, and valuation pressure caused by changes in real interest rates.

Key data

• Samsung Electronics 12-month target priceW480,000Buy maintained; 2Q26 core operating profit is estimated to exceed W100tn, driven primarily by stronger-than-expected DRAM profitability.
• Samsung Electronics EPS revisions2026-2028 EPS raised by 0.2%-4.4%Reflects higher DRAM profit estimates.
• Space Exploration Technologies Corp 12-month target price$205Initial coverage at Buy; total revenue is expected to post a 91% CAGR from 2025 to 2030, reaching $474.3bn in 2030.
• InnoScience 12-month target priceHK$114Initial coverage at Buy; 2025-28E revenue is expected to post a 73% CAGR, driven by rising GaN penetration in AI data centers.
• InnoScience capacity targetend-2029E超过68k wafers/monthCapacity expansion and product-mix upgrades are viewed as supporting margin expansion.
• Panasonic 12-month target price¥5,000Target price raised and Buy maintained, benefiting from demand for battery backup units in data centers.
• Daihen 12-month target price¥19,000Downgraded to Neutral because valuation upside is limited.
• Japan Steel Works target operating profit guidanceFY3/29 operating profit ¥40bnThe company raised its guidance; Goldman Sachs maintains Buy and a 12-month target price of ¥11,500.
• Indian metals EBITDA/t expectationsQ1FY27环比上升INR 1,500-2,000Domestic ferrous-metal companies are supported by higher realized prices.
• Indian pharmaceutical revenue and margin expectationsQ1 revenue expected to grow approximately 12%, with margins contracting 185bps year on yearRevenue is supported by domestic volumes and new products, but product mix and freight costs weigh on margins.
• Busy Ming and Wanchen earnings forecast revisionsBusy Ming raised by 6%-13%; Wanchen raised by 2%-11%Driven by faster-than-expected store expansion and resilient same-store sales.
• Chacha 12-month target priceRmb22.5Upgraded to Buy, supported by easing competition and lower procurement costs.
• WH Group 12-month target priceHK$11.1Buy maintained but target price lowered; 2Q26 operating profit is expected to decline by a high-single-digit percentage year on year.
• Guangdong Songfa Ceramics 12-month target priceRmb2002026E-28E earnings forecasts raised by 8%-22% following a strong and better-than-expected 1H26 preview.
• LG Energy Solution 12-month target priceW520,000Buy maintained; 2Q26 revenue excluding AMPC of W7.3tn was broadly in line with expectations, but operating profit of W113bn was below expectations.
• Impact of AI on the U.S. technology profit poolApproximately $10bn of temporary staffing, $41bn of permanent recruiting, and $12bn of freelance profit pools under pressure; approximately $38bn of recruiting workflow and $17bn of online marketplace opportunitiesThe report uses the human-resources industry as an example of AI-driven redistribution of corporate spending.
• Saudi strategic capital expenditure opportunityUS$468-664bn through 2030Covers seven strategic industries and is driven by the final phase of Vision 2030.
• Goldman Sachs global equity coverage3,074 equity securities as of April 1, 2026Global investment research coverage universe disclosed in the appendix.

Impact & implications

For investors, the implication is that a single technology beta should not be used to express APAC technology views in 2H26. Instead, allocations should be structured around tight supply and demand, AI infrastructure, cost improvement, and the capital expenditure cycle. Within semiconductors, memory, MLCCs, electronic materials, GaN, power, and silicon wafers may continue to benefit from tight supply and demand or AI data center demand. Within consumer staples, value retail and falling costs provide earnings resilience. Heavy-asset companies with low obsolescence risk still have room for earnings delivery amid global reindustrialization and the data center construction cycle.

Risks

• A slowdown in technology hardware and semiconductor demand could weaken the tight supply-and-demand thesis for memory, MLCCs, silicon wafers, and power semiconductors.
• AI data center capital expenditure below expectations would affect GaN, power, HBM, electronic materials, and data center-related industrial electronics names.
• Persistently weak consumer sentiment could weigh on Chinese consumer staples sales, channel expansion, and pricing power.
• Cost-side uncertainty remains, including U.S. beef and freight, raw materials, energy costs, and the squeeze from higher memory costs on downstream smartphone margins.
• Some target prices already reflect high growth expectations. Insufficient earnings delivery or limited valuation upside could lead to rating downgrades or share-price pullbacks.
• Geopolitics, the Middle East situation, shipping bottlenecks, regulatory restrictions, and cross-border market volatility could affect industrial, energy, and Saudi capital expenditure themes.

What to watch

• Whether tight memory supply and demand in 2H26 continues to spill over into MLCCs, electronic materials, silicon wafers, and analog/power semiconductors outside China.
• Subsequent changes in Samsung Electronics' DRAM and HBM volume and price growth and smartphone margin pressure.
• The pace of InnoScience GaN penetration in 800 VDC AI data center power, capacity ramp-up, and gross-margin expansion.
• Whether the recovery in Chinese consumer staples sales after June continues and whether value retail store expansion and same-store sales remain resilient.
• Whether easing competition, lower procurement costs, and margin recovery at Chacha are delivered.
• Japan Steel Works' energy-equipment orders, price improvement, and downside pressure on industrial machinery.
• LG Energy Solution's core earnings trajectory, the pace of GM JV restart, and sustainability of double-digit ESS margins.
• The actual deployment of data center, semiconductor, utility, and defense capital expenditure as HALO stocks shift from valuation re-rating to earnings-driven performance.
• Progress on strategic projects in the final phase of Saudi Vision 2030, dual-coast infrastructure, and order conversion for domestic beneficiary companies.