TAIPEI/SINGAPORE, Dec 12 (Reuters) – Taiwan’s tech-heavy stocks show few signs of slowing a rally even as AI bubble worries cast a shadow over global markets, underscoring home-grown confidence in the structural advantages in AI that foreign investors may have overlooked.
Taiwan’s benchmark index is poised to breach a record 30,000 points in 2026, investors say, extending a three-year surge that has seen the stock market nearly double as the island rides a wave of demand for chips that power artificial intelligence.
While foreign money worries about stretched AI valuations, Taiwanese investors have enthusiastically ploughed into the market.
Analysts say domestic investors are betting on Taiwan’s unique position as the lynchpin of an AI supply chain, where even increasing competition in the sector would only benefit Taiwanese firms, including TSMC, the world’s largest contract chipmaker.
One major focus of anxiety around AI comes from uncertainty about Nvidia’s ability to sustain its market dominance, with Google’s tensor processing units (TPUs) emerging as a potentially more cost-effective alternative to Nvidia’s graphics processing units (GPUs).
But it’s a win-win scenario for Taiwan because the island is essential to supply chains of both the GPU and TPU, the building blocks of AI computing power.
“Taiwan is a major beneficiary of the AI market,” said Piter Yang, a fund manager of Fuh Hwa Securities Investment Trust Co, citing the advantage of Taiwan being the world’s semiconductor hub.
And for now, as a promising future fuels optimism, Taiwan markets and local investors seem relatively unfazed by the AI bubble fears, just as they remain calm in the face of rising geopolitical tensions with Beijing that have often spooked foreign investors.
NO AI BUBBLE WORRIES FOR NOW
Gains in Taiwan’s market have also been underpinned by earnings growth, leaving it with a reasonably steady price-to-earnings ratio of 21, below that of the Nasdaq and the Nikkei, meaning the rally has not made stocks more expensive.
“We are not worried about an AI bubble,” said Li Fang-kuo, chairman of the securities investment arm of food conglomerate Uni-President. “We are comfortable with where the valuations stand.”
Li pointed out that several of the magnificent seven companies in the U.S. have gross margins of as much as 70% or higher. “So it’s not comparable to the dot-com bubble, when companies were not generating meaningful earnings.”
Goldman Sachs shares the view. “The current industry context does not constitute a full-fledged bubble,” their strategists said in a research report this month, adding they remain overweight on tech shares.
