(Correction of reporter’s signature)
Author: Faith Hung and Rae Wee
TAIPEI/SINGAPORE, Dec 12 (Reuters) – Taiwan’s tech stocks’ rally shows few signs of slowing even as fears of an artificial intelligence bubble cast a shadow over global markets, underscoring local companies’ confidence in the structural advantages of artificial intelligence that foreign investors may have overlooked.
Investors say Taiwan’s benchmark index is on track to top a record 30,000 points in 2026, extending a three-year surge that has seen stocks nearly double amid a wave of Taiwanese demand for artificial intelligence chips.
Although foreign investors are concerned that artificial intelligence valuations are too high, Taiwanese investors are enthusiastically investing in the market.
Analysts say domestic investors are betting on Taiwan’s unique position as a key to the artificial intelligence supply chain, and even increased competition in the industry will only benefit Taiwanese companies, including Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker.
A major focus of the anxiety surrounding artificial intelligence comes from uncertainty about Nvidia’s ability to maintain its market dominance, with Google’s Tensor Processing Unit (TPU) emerging as a potentially more cost-effective alternative to Nvidia’s graphics processing unit (GPU).
But it’s a win-win situation for Taiwan, which is critical to the supply chain for GPUs and TPUs, the building blocks of AI computing power.
“Taiwan is the main beneficiary of the artificial intelligence market,” said Peter Yang, a fund manager at Fuhua Securities Investment Trust Co., citing Taiwan’s advantages as the world’s semiconductor center.
For now, with optimism fueled by a bright future, Taiwan’s markets and local investors appear relatively untroubled by AI bubble worries, just as they remain calm in the face of growing geopolitical tensions with Beijing that often spook foreign investors.
No need to worry about the AI bubble just yet
The rise in Taiwan’s stock market has also been supported by earnings growth, with its price-to-earnings ratio at a fairly stable 21 times, lower than the Nasdaq and Nikkei, meaning the rise in the stock market has not made stocks more expensive.
“We are not worried about an AI bubble,” said Li Fangguo, chairman of the U.S. food group’s securities investment arm. “We are comfortable with the valuation level.”
Li pointed out that several of the seven largest companies in the United States have gross profit margins as high as over 70%. “So this is not comparable to the dot-com bubble, where companies were not generating meaningful earnings.”
