[Goldman Sachs Report] The Historic Rebound of the Korean Market and Kakao's AI Momentum

Subtitle: Unshakable Semiconductor Fundamentals and the Transaction-Driven 'Kanana' Ecosystem

Original Report Date: March 5, 2026

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3-Line Summary

- Market Rebound & Liquidity: The KOSPI staged its most dramatic single-day rally (+9.8%) since 2008. While foreign investors initiated the surge, retail investors aggressively absorbed institutional selling, becoming the ultimate driving force behind this explosive rebound.

- Rock-Solid Fundamentals: Despite fears of surging global oil prices, Korea's robust 7-month strategic petroleum reserve and overwhelmingly large semiconductor export revenues act as a powerful shield. The memory chip super-cycle is projected to extend well into 2027.

- Kakao's AI Gambit & Monetization: Kakao's new AI agent, 'Kanana', goes beyond simple search, acting as a direct conduit for e-commerce and transactions. Recognizing this tangible monetization potential, GS maintains a Buy rating on Kakao with a target price of 90,000 won.

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In-Depth Report Analysis

The South Korean stock market has recently experienced extreme rollercoaster volatility. However, Goldman Sachs (GS) emphasizes that this volatility should be viewed as a stellar entry opportunity rather than a reason for panic. In its latest reports, GS reaffirms the unshakable macroeconomic fundamentals of the Korean market and provides an in-depth analysis of 'Kakao', a company preparing for a significant leap forward through its new AI strategy.

1. The Strongest Rollercoaster Since 2008: The Spectacular Return of Retail Investors

On March 5, the KOSPI surged by 9.8% in a single day, marking its best performance since the aftermath of the global financial crisis in October 2008 (+12.2%). Large-cap semiconductor stocks like Samsung Electronics (+11.3%) and SK Hynix (+10.8%) spearheaded this phenomenal rally.

The most interesting aspect is the flow of funds. While foreign investors ignited the rally early in the session, retail investors ultimately took the reins. They absorbed massive sell-offs from domestic institutions, finishing the day as the sole net buyers on the KOSPI. Their aggressive buying was heavily concentrated in the defense, EV supply chain, and memory semiconductor sectors. The fact that retail investors—who net-sold $18 billion worth of Korean stocks last year—are returning to the domestic market, spurred by tax incentives and policy shifts, is interpreted as a highly positive liquidity signal.

2. Two Shields Navigating Macro Waves: 'Memory Supremacy' and 'Energy Resilience'

Regarding the geopolitical anxieties and oil price fears currently suppressing the Korean market, Goldman Sachs asserts there is absolutely no need to panic.

- A Seller's Market in Memory Chips: The current memory market is fundamentally a seller's market. High selling prices generate record profits, which are seamlessly reinvested into massive R&D and CapEx, thereby cementing the dominance of top-tier companies in a virtuous cycle. As SK Hynix noted it would struggle to meet 100% of customer demand this year, GS forecasts this overwhelming boom to persist beyond 2026 and well into 2027.

- Fundamentals Defying the Oil Shock: Although Korea imports all its energy, its current strategic petroleum reserves cover 7 months of imports, providing ample resilience against short-term shocks. Most importantly, the explosively growing semiconductor export revenues easily dwarf the increased costs of energy imports. Even in an extreme scenario where crude oil remains at $100 per barrel throughout the year, Korea's trade balance and corporate fundamentals will remain robust.

3. Kakao's Next Step: Core Business Revival and the Advent of AI 'Kanana'

Having confirmed the stability of the macro environment, GS turned its attention to Kakao's vision. According to a recent investor meeting in Singapore, Kakao is successfully recovering the core competitiveness of KakaoTalk while preparing for a new chapter spearheaded by its next-generation AI model, 'Kanana'.

Since expanding the feed-type ad inventory in KakaoTalk last Q4, platform momentum has visibly improved, with Q1 ad revenue growth tracking above the 10% mark. Crucially, the company's annual revenue growth target of approximately 10% for 2026 does not include any additional revenue from AI services. Thus, once the AI business fully launches, earnings could easily surpass market expectations, delivering a significant positive surprise.

4. Beyond Search, Toward 'Transactions': Kakao's Smart AI Monetization Formula

What Goldman Sachs values most about Kakao's AI strategy is the transaction-centric orientation of 'Kanana', the AI agent scheduled for integration in March.

Initial beta test results revealed that over half of the conversations users had with Kanana were related to e-commerce (shopping) rather than simple information retrieval. This suggests that Kanana has massive potential to evolve beyond a simple chatbot into a Discovery Interface that directly drives actual consumption and seamless transactions.

Kakao plans to integrate its proprietary payment gateway directly within the AI environment in the second half of the year. The business model is clear: Kakao will collect a 2-3% commission fee per transaction whenever a user books a service or purchases an item via the AI. Initially focusing on high-frequency services like commerce and mobility, Kakao aims to eventually expand this into a massive AI ecosystem that embraces external third-party partners.

5. Target Price of 90,000 Won: The Rationale and Hidden Risks

In conclusion, by summing the solid value of its core operations (approx. 32.2 trillion won) and the value of its major subsidiary stakes (approx. 7.5 trillion won), Goldman Sachs maintains a Buy rating on Kakao with a 12-month target price of 90,000 won.

However, investors should be mindful of inherent risks. If users prefer independent, dedicated AI apps like ChatGPT over an integrated AI agent within KakaoTalk, or if they struggle to break their entrenched habit of searching via traditional portal sites like Naver, the pace of Kakao's AI monetization could be slower than anticipated.

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StockHub Insight & Comments

Those who stare directly at fundamentals when market fear peaks are the ones who reap the rewards. This GS report accurately cuts through short-term geopolitical noise to highlight the massive super-cycle underway in the Korean semiconductor industry. For investors utilizing StockHub to navigate global markets, a contrarian approach is necessary: look past daily oil volatility and bet on the long-term memory cycle extending to 2027, backed by the powerful liquidity momentum of returning retail investors.

Furthermore, Kakao's case offers a compelling answer to the monetization dilemma currently facing global Big Tech. Kakao's strategy to directly link immensely expensive AI operations to a commission-generating business that opens consumers' wallets—rather than leaving it as a mere toy or encyclopedia—is incredibly astute. When investing in the domestic market, we highly recommend prioritizing companies that possess a clear pipeline to convert AI engagement into actual, measurable revenue.