5 stocks that Goldman gives over 70% upside in the coming year

Goldman Sachs published top global stock picks for December, flagging five names with 70%+ upside potential: Horizon Robotics (94% upside; 12‑month target HKD 15.30) driven by upgraded product mix and AI chips for autonomous vehicles, Hon Hai (77% upside; 12‑month target TWD 400 at 21x earnings) on AI servers and smartphone demand, Zalando (up to 90% upside) benefiting from the About You acquisition and expected mid‑teens to 20% annual earnings growth, MakeMyTrip (72% upside; 12‑month target $123) on catalysts for travel recovery, and Wise (70% upside) as a long‑term cross‑border payments play. Goldman cites competitor analysis, operating profit growth and valuation re-rates as drivers while flagging downside risks including stronger competition, pricing pressure, slower demand, supply‑chain and geopolitical risks, and execution or margin setbacks.

Analysis

Market structure: Goldman's call concentrates winners in AI-enabled hardware (Horizon, Hon Hai), digital consumer platforms (Zalando, MakeMyTrip) and fintech rails (Wise). Expect upward pressure on valuations for AI/auto-supply chains over 6–18 months if product ramps materialize, while incumbent OEM suppliers without upgraded nodes face margin compression; FX and Taiwan-capex flows will bid TWD and EM manufacturing equities. Cross-asset: stronger AI optimism should steepen EM credit spreads mildly, lift Taiwan FX vs USD, and raise implied vols on China/HK tech names ahead of product milestones.

Risk assessment: Tail risks include severe pricing competition in automotive chips, Chinese export controls or Taiwan-China supply shocks, and EU consumer weakness that derails Zalando’s 20% EPS CAGR thesis. Immediate (days–weeks) risks center on headline-driven vol spikes around chip production announcements and MakeMyTrip/Q3 prints; medium-term (3–12 months) risks are execution on mass production and About You integration; long-term risks (>12 months) are secular demand shifts and regulatory interventions. Hidden dependencies: revenue levering in Hon Hai depends on data-center capex cycles; Horizon’s valuation assumes non-trivial gross-margin expansion tied to proprietary IP adoption.

Trade implications: Direct plays: selective longs in Horizon (HK-listed) and Hon Hai (2317.TW) with strict stops, and a volatility-defined LEAP call spread on MMYT ahead of Jan earnings. Relative trades: long Zalando (ZAL.DE) vs short STOXX Europe 600 Retail (1:0.5) to isolate platform share gain; use 12–18 month horizon. Options: use defined-risk call spreads for MMYT and buy-put spreads or index put tails on Hang Seng Tech (6–12 months) to hedge geopolitical/supply shocks.

Contrarian angles: Consensus overlooks execution risk—Goldman’s targets assume near-flawless product ramps and margin improvement; a single missed mass-production date or weaker AI-server orders could reset multiples by 20–40%. Historical parallel: 2018 auto-chip cycles show sharp rallies followed by 30%+ corrections when demand slows. Unintended consequence: rapid re-rating in suppliers can attract capacity additions that compress ASPs; favor names with software/moat over pure-node scaling.

Key Decisions for Investors

• Establish a 2–3% long position in Horizon Robotics (HK-listed) with a 12-month horizon targeting HKD 15.30; set an initial stop-loss at -25% and trim by 50% if no J6P mass-production confirmation within 3–6 months.
• Add a 2% long in Hon Hai (2317.TW) sized for 12–18 months targeting TWD 400; hedge 50% of TWD currency exposure via forwards or FX options and reduce position by half if AI-server revenue growth lags consensus by >15% in the March 2025 release.
• Implement a pair trade: long Zalando (ZAL.DE) 1.5–2% vs short STOXX Europe 600 Retail 1% (net long Zalando exposure) for 12–18 months; take profits if Zalando delivers >5pp EBIT margin expansion or cut if EU apparel sales decline >5% YoY.
• Buy a defined-risk call spread on MakeMyTrip (MMYT) with 9–12 month expiry sized to 1% portfolio risk (e.g., buy LEAP calls and sell higher strike to fund); reassess post-January Q3 FY26 print and close if revenue misses consensus by >5%.
• Purchase a 1–1.5% cost hedging position: put spread on Hang Seng Tech Index (6–12 month expiry) sized to cap tail geopolitical/supply-chain risk for the above longs; unwind if index implied vol falls >30% from current levels.