(Correct the name of the reporter)
By Faith Hung and Rae Wee
TAIPEI/SINGAPORE, Dec 12 (Reuters) – Technology-rich Taiwanese stocks show little sign of slowing even as artificial intelligence bubble worries cast a shadow over global markets, underscoring domestic confidence in the structural advantages of artificial intelligence that foreign investors may have overlooked.
Taiwan’s benchmark index is poised to top a record 30,000 points in 2026, investors say, extending a three-year rally that has doubled the stock market, as the island rides a wave of demand for chips that power artificial intelligence.
While foreign money frets over stretched AI valuations, Taiwanese investors have enthusiastically entered the market.
Analysts say domestic investors are betting on Taiwan’s unique position as a pillar of the artificial intelligence supply chain, where even increased competition in the sector would only benefit Taiwanese firms, including TSMC, the world’s largest chip maker.
A major focus of anxiety around artificial intelligence stems from uncertainty about Nvidia’s ability to maintain 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, as the island is critical to the supply chains of both GPU and TPU, the building blocks of AI computing power.
“Taiwan is a major beneficiary of the artificial intelligence market,” said Piter Yang, a fund manager at Fuh Hwa Securities Investment Trust Co, citing the advantage of Taiwan being the world’s semiconductor hub.
And for now, with a promising future fueling optimism, Taiwanese markets and local investors appear relatively unfazed by fears of an AI bubble, 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 were also supported by earnings growth, leaving it with a fairly stable price-to-earnings ratio of 21, below that of the Nasdaq and Nikkei, meaning the rise hasn’t made the stock more expensive.
“We are not worried about an AI bubble,” said Li Fang-kuo, chairman of the securities investment department of food conglomerate Uni-President. “We’re comfortable with where the ratings are.”
Li pointed out that several of the Magnificent Seven companies in the US have gross margins of up to 70% or more. “So it’s not comparable to the dot-com bubble, when companies weren’t generating significant earnings.”