Goldman Sachs Korea frontline commentary: IBM's plunge confirms storage shortage, retail investors capitulate but key support levels in Korean stocks hold firm, institutions believe storage capacity expansion won't be too aggressive

IBM shares plunged 25% in a single day, which Goldman Sachs sees not as bad news but as the strongest real-world proof of the storage supercycle.

According to Chasewind Trading Desk, the latest frontline commentary from Goldman Sachs’ Seoul team on July 15 noted that the root cause behind IBM’s performance collapse lies in enterprise clients shifting capital expenditures on a large scale toward servers, storage, and memory purchases, rushing to secure supply-constrained infrastructure ahead of anticipated price hikes—this “crowding out effect” is spreading from hyperscale cloud vendors’ AI capital spending to regular enterprise IT buyers, thereby confirming the breadth and depth of storage shortages in the real economy.

Meanwhile, the Korean stock market, despite experiencing sharp volatility, has maintained key technical support levels. The Seoul team pointed out that KOSPI received net buying support from local and foreign institutions at the 61.8% Fibonacci retracement level. While retail investors have exited at a loss, institutional investors generally believe that due to structural shortages in equipment and components, the actual capacity expansion in the industry will be far lower than the market fears. Goldman Sachs maintains its KOSPI target at 12,000 points, clearly staying bullish.

IBM Plunges 25%: Crowding-Out Effect Spreading to Enterprise IT, Storage Pricing Power Validated in the Real Economy

IBM’s stock dropped 25% on Tuesday and Salesforce fell 2%. The trigger for both points to the same phenomenon: corporate clients are massively shifting capital expenditures from software and services toward servers, storage, and memory purchases, to lock in supply-constrained infrastructure in anticipation of price increases. IBM management admitted that they failed to anticipate the scale of this reprioritization of capital spending.

Goldman Sachs believes the implications of this event go far beyond IBM itself. The core bull case of the storage supercycle centers around: the wafer consumption intensity of HBM (high-bandwidth memory) is squeezing out the supply for traditional server DRAM, tightening the overall DRAM market—not just the HBM segment. IBM’s latest comments are a direct confirmation of this “crowding out effect” among non-AI enterprise clients in the real economy.

Goldman has further reinforced its previous view: storage suppliers’ pricing power is strengthening; structural supply constraints and upcoming price increases are likely to trigger a re-rating for storage manufacturers. The “higher for longer” storage cycle narrative now has new anchor points from the enterprise side.

KOSPI Technical Support Intact: Institutions Buy the Dip, Retail Investors Exit at a Loss

KOSPI recently underwent a sharp correction, plunging 9% in a single day on Monday. According to Goldman Sachs, this decline was significantly amplified, mainly due to rapid deleveraging of newly listed single-stock leveraged ETFs, triggering a self-reinforcing chain of liquidations that was clearly disconnected from fundamental drivers.

However, at the 61.8% Fibonacci retracement level, both local and foreign institutions turned net buyers, while retail investors continued to sell at a loss. Goldman Sachs observed this divergence in both its weekly prime brokerage data and client feedback from its Singapore roadshow.

Meanwhile, most tech investors contacted by Goldman Sachs are cautiously optimistic about the pace of capacity expansion, generally believing that structural shortages in equipment and components may result in actual expansion being far less aggressive than the market fears.

Media reports indicate that ASML is expected to raise its sales guidance, and the market will closely watch whether the company can effectively ramp up capacity amid surging equipment demand.

Overall, Goldman Sachs sees four positive shifts in the current market landscape:

First, stock prices are more attractive after a seasonally weak third quarter; second, retail investors’ exit has cleaned up the holding structure; third, enterprise IT demand is stronger than expected; and fourth, both foreign and local institutions have switched to net buying at key technical support levels.

Goldman Sachs maintains its KOSPI target at 12,000 points and remains bullish overall.