AI-Driven Growth Fuels Emerging Markets Surge

Goldman Sachs has increased its 12-month target for the MSCI emerging markets index due to AI-driven earnings growth. A rapid resolution to the Iran conflict might also boost currencies and relieve bond markets. North Asian markets, especially Korea and Taiwan, are leading the rally with impressive growth projections.

Goldman Sachs recently raised its 12-month forecast for the MSCI emerging markets index, crediting growth spurred by artificial intelligence. The financial giant noted that a swift resolution to the Iran conflict could further strengthen currencies and support bond markets.

The firm adjusted its index target to 2,000 from 1,850, highlighting a potential 12% upside from its last close of 1,787.88. North Asian markets, such as South Korea and Taiwan, are leading the charge with AI-driven advancements, with North Asian equities surging 9% in May, easily surpassing the 5% increase in the S&P 500.

Goldman forecasts the earnings-per-share (EPS) for the index to reach 55% this year, up from a prior estimate of 45%. The outlook for tech-heavy regions remains robust, while rate-sensitive markets like South Africa, Brazil, and the UAE could also benefit from optimism surrounding a possible U.S.-Iran agreement.