HONG KONG (Reuters) - Goldman Sachs raised its target price for emerging markets stocks on Thursday, projecting that the AI-powered rally in Chinese equities could boost other markets as well.

The brokerage raised its 12-month target for MSCI Emerging Markets Index by 3%, reaching 1,220 from 1,190, indicating an 11% potential upside from current levels.

The increase reflects Goldman Sachs' recent adjustment to its MSCI China target, driven by the impact of AI adoption on valuations through earnings, multiples and portfolio flows.

The firm noted that this could spill over to the broader emerging markets equity landscape, where most China-sensitive markets have been lagging behind their historical correlation to Chinese equities.

The China rally could be further supported by a stimulus-driven catch-up in A-shares. The recent fiscal stimulus announcement at the much-anticipated "Two Sessions" this week is likely to help stabilise growth and lift market sentiment, Goldman Sachs said.