AI Demand Reinforces the North Asia Tech Theme, with Multiple Companies Beating Expectations and Buy Ratings Reiterated

Overview

This report is Goldman Sachs' comprehensive research summary for Asian markets, covering the Korean memory cycle and market strategy, the North Asian macro environment, Japan FX intervention, and earnings reviews of multiple Asian and U.S. companies. The overall view is positive: AI investment and technology exports support North Asia's external surplus, supply and demand for HBM and advanced-node-related areas remain tight, and several companies' earnings, orders or management guidance exceeded expectations. The report also notes that positive fundamentals may be disrupted by exchange rates, tariffs, rising costs, property weakness and future capacity expansion.

Core views

Inventories in the Korean memory sector are healthy, there is no obvious near-term risk of NAND oversupply, and AI server demand plus HBM4 ramp-up are expected to drive both volume and price growth. The recent pullback in Korean equities implies overly pessimistic fundamental expectations; position clearing, growth in non-memory sectors and corporate governance reform should help the market resume its upward trend. North Asia benefits from AI investment and technology exports, while Indonesia faces policy and oil-price risks; China's domestic demand remains weak, but the drag from property is expected to be largely released around 2028. At the company level, earnings or business momentum for AMEC, Ibiden, Mitsubishi Heavy Industries, HSBC and others have been revised upward; although AMD's results and guidance were better than market expectations, high expectations may put near-term pressure on the share price.

Analysis framework

The report forms judgments by combining quarterly earnings and management guidance gaps, earnings forecast revisions, order and capacity trends, supply-demand and inventory conditions, valuation multiples, market positioning, macro trade surpluses and FX policy. Stock target prices generally use a 12-month horizon and incorporate earnings forecasts, relative industry valuations and structural growth opportunities; the macro section evaluates regional and FX prospects through trade, commodities, policy and cross-asset transmission channels.

Methodology notes

• Earnings and ValuationEarnings Expectation Gap Analysis

  Compares actual results, company guidance, Goldman Sachs forecasts and market consensus expectations, and adjusts earnings forecasts and target prices accordingly.

  This method is used to identify whether the sources of earnings beats are sustainable, such as product mix, selling prices, orders, exchange rates, tariff refunds or investment income, and to distinguish operating improvements from one-off factors.

• Factor AnalysisGS Factor Profile

  Compares individual stocks with the market and industry peers across four dimensions: growth, financial returns, valuation multiples and composite indicators.

  Growth metrics mainly reference forward sales, EBITDA and EPS growth; financial returns reference ROE, ROCE and CROCI; valuation references P/E, P/B, price-to-dividend ratio and enterprise value multiples. The composite indicator is the average of growth, financial returns and inverse valuation percentiles.

• M&A AnalysisM&A Rank

  Assesses the probability that a company becomes an acquisition target based on qualitative and quantitative factors, and classifies it into levels 1 to 3.

  Level 1 corresponds to a potential acquisition probability of 30%—50%, level 2 corresponds to 15%—30%, and level 3 corresponds to 0%—15%; for level 1 or level 2 companies, the target price may incorporate M&A factors.

• Macro and Cross-AssetTrade—Commodity—FX Transmission Framework

  Analyzes regional assets and exchange rates through technology exports, trade surpluses, energy prices, commodity demand and the common U.S. dollar factor.

  This framework explains North Asia's external surplus formed by AI investment and technology exports, and is also used to distinguish the Australian dollar's commodity-channel exposure to China from the apparent correlation caused by broad U.S. dollar fluctuations.

Asset mapping & comparison

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

• AMEC（688012.SS）

  Direct beneficiary of demand for advanced-node semiconductor equipment

  Strengths

  Revenue growth is strong, demand from advanced logic and memory capacity expansion is solid, and sustained high R&D investment helps shorten development cycles and launch competitive new equipment.

  Weaknesses

  The second-quarter profit beat partly came from higher investment income, and the 2027 earnings forecast was only slightly raised.

  Comparison

  Target price slightly raised from Rmb573 to Rmb576, Buy maintained.

  Risks

  Slowdown in advanced-node capacity expansion, R&D conversion falling short of expectations, decline in investment income and intensified equipment competition.

• Samsung Electronics and SK Hynix

  Core beneficiaries of HBM and the memory upcycle

  Strengths

  Healthy inventories, robust AI server demand, long-term agreements that are more favorable to suppliers, and HBM4 ramp-up supporting volume and price growth.

  Weaknesses

  SK Hynix's second-quarter operating profit missed expectations due to lower DRAM average selling prices.

  Comparison

  Samsung Electronics' expected 2027 P/E is 3.6x and P/B is 1.4x; SK Hynix's are 3.5x and 1.6x, respectively, with valuations reflecting lingering market doubts about earnings sustainability.

  Risks

  Memory prices falling short of expectations, increased NAND supply, weakening customer capital expenditure and execution risk in technology iteration.

• KOSPI

  A combined reflection of Korea's memory earnings cycle, non-memory growth and governance reform

  Strengths

  Earnings forecasts are strong, and leveraged ETF, margin trading and hedge fund positions have been somewhat cleared.

  Weaknesses

  The index has recently seen a significant pullback and is highly sensitive to the memory cycle.

  Comparison

  Goldman Sachs maintains Overweight on the Korean market, with a 12-month target of 12,000.

  Risks

  Cooling global AI capital expenditure, reversal of the memory cycle, regulatory changes and shocks to external demand.

• China value retailers

  Beneficiaries of structural upgrading in China's food and beverage retail channels

  Strengths

  Store opening pace exceeded expectations, same-store sales are resilient, and the duopoly structure of Busy Ming and Wanchen has been further consolidated.

  Weaknesses

  Expansion is relatively concentrated in validated markets, while operating quality in lower-tier cities and counties remains to be verified.

  Comparison

  Busy Ming and Wanchen together contributed more than 85% of tracked net new stores, and both had Buy ratings reiterated.

  Risks

  Rapid store expansion leading to lower per-store efficiency, intensified competition, weak consumer demand and supply chain execution risk.

• Large Chinese banks

  Targets for low-cost long-duration liabilities and high-dividend strategies

  Strengths

  Balance sheets are solid, provisions are sufficient, and dividend yields of 4%—5% are significantly higher than the 1.6% five-year large-denomination certificate of deposit rate.

  Weaknesses

  Deposit repricing is slow, and industry net interest margin forecasts have been lowered.

  Comparison

  Net interest margins at the four major banks are expected to decline by 2.6 basis points in 2027, better than the 3.0 basis points for small and medium-sized banks; CCB and BOC are the key preferred names.

  Risks

  Insufficient loan growth, rising liability costs, deterioration in asset quality and further interest rate cuts.

• Yen

  Trading target for coordinated FX intervention and Japanese domestic policy

  Strengths

  Intervention of up to approximately US$85bn shows a relatively strong policy willingness to stabilize the exchange rate.

  Weaknesses

  The market reaction was relatively limited, indicating that yen weakness remains consistent with macro fundamentals.

  Comparison

  Near-term intervention can only provide temporary relief, while promoting capital repatriation is seen as a more durable tool.

  Risks

  U.S.-Japan interest rate differentials remaining high, insufficient policy coordination and changes in global growth.

• AUD

  Selective exposure to China's economy through the commodity channel

  Strengths

  China's high-tech manufacturing policies may provide some support.

  Weaknesses

  Part of the correlation with USD/CNY actually stems from the common U.S. dollar factor, rather than a pure China signal.

  Comparison

  Compared with broad China growth, the Australian dollar is more directly affected by commodity demand.

  Risks

  Persistent weakness in China's property sector and domestic demand may limit positive impetus from China.

• AMD

  Beneficiary of AI and server CPU demand

  Strengths

  Quarterly results and third-quarter guidance were both above market consensus expectations, and expectations for server CPU share gains are positive.

  Weaknesses

  Investor expectations and positioning were already high before the earnings release.

  Comparison

  Maintains Buy and a 12-month target price of US$640, but expects the share price may decline in the short term after results are announced.

  Risks

  High expectations not being met, slowdown in AI capital expenditure, intensified competition and server share gains falling short of expectations.

Key data

• 2027 HBM priceApproximately 100% year-over-year growthSK Hynix's blended HBM selling price is expected to approach US$2.9/Gb.
• Korean market earnings growth forecast320% in 2026, 35% in 2027, 20% in 2028Mainly driven by a stronger and longer memory cycle as well as growth in non-memory sectors.
• KOSPI target12,00012-month target; the Korean market remains Overweight.
• AMEC preliminary second-quarter revenueRmb3.8bnUp 35% year over year, with strong demand from advanced logic and memory capacity expansion.
• AMEC target priceRmb576Raised from Rmb573; Buy maintained.
• Ibiden full-year operating profit guidance¥127bnPreviously ¥90bn; 12-month target price raised from ¥25,500 to ¥26,700.
• Mitsubishi Heavy Industries first-quarter business profit¥159.6bnAbove Goldman Sachs' forecast of ¥108bn; target price raised to ¥6,200.
• HSBC 2026 banking net interest income forecastUS$47bnAbove company guidance; target price is GBp1,860 for HSBA.L and HK$193 for 0005.HK.
• Toyota share buybackUp to ¥1tnAlso raised FY3/27 operating profit guidance from ¥3.0tn to ¥3.4tn.
• China value retail net store openingsMore than 14,000 storesData for the first seven months; Busy Ming and Wanchen contributed more than 85% of tracked net new stores.
• Scale of coordinated yen interventionUp to approximately US$85bnEstimated to have occurred from July 30 to 31, the largest two-day operation since 2011.
• AMD quarterly revenue and non-GAAP EPSUS$11.5bn; US$1.66Third-quarter revenue guidance is US$13.0bn, implying EPS of US$1.93.

Impact & implications

The investment implications are concentrated in three themes: first, HBM, advanced packaging substrates, semiconductor equipment and data center power equipment remain the main beneficiaries of AI capital expenditure; second, Korean and North Asian assets have relative advantages supported jointly by earnings growth, trade surpluses and improved positioning; third, stock selection should distinguish sustainable operating improvements from one-off contributions such as exchange rates, tariff refunds and investment income. Yen intervention may slow near-term volatility, but without support from global growth or Japanese domestic policy, it is difficult to form a lasting appreciation trend.

Risks

• AI capital expenditure or server demand may be lower than expected, weakening orders related to HBM, substrates, semiconductor equipment and data centers.
• Memory capacity expansion may outpace demand, causing DRAM, NAND or HBM prices to fall.
• Exchange rate volatility may change Japanese corporate earnings, target price assumptions and cross-border asset returns.
• One-off items such as tariff refunds and investment income may overstate companies' normalized earnings power.
• Persistent weakness in China's property sector and domestic demand may weigh on consumption, bank credit and Australian dollar-related commodity channels.
• Rising energy prices and policy uncertainty may pressure Asian markets such as Indonesia.
• Rapid store openings by value retailers may lead to excessive store density, declining per-store efficiency and intensified competition.
• Future concentrated capacity expansion in industries such as optical fiber may change the supply-demand balance around 2028.
• Research views are based on public information and forecasts as of the report date, and ratings, earnings forecasts and target prices may be adjusted.

What to watch

• 2027 HBM contract prices, long-term agreement coverage and HBM4 mass production progress.
• Korean memory inventories, DRAM average selling prices and NAND supply changes.
• Whether KOSPI can stabilize after position clearing, and progress in Korean corporate governance reform.
• AMEC advanced logic and memory equipment orders, new product validation and conversion of R&D results.
• Ibiden high-end CPU substrate demand and capacity utilization of new GPU projects.
• Mitsubishi Heavy Industries gas turbine pricing, U.S. utility demand and defense orders.
• HSBC cost growth, variable compensation, loan growth and Asian wealth management momentum.
• China value retailers' same-store sales, store-opening quality in lower-tier markets and duopoly structure.
• Capital repatriation policies after yen intervention, U.S.-Japan interest rate differentials and the Bank of Japan policy path.
• AMD server CPU share and delivery against third-quarter guidance.