- .TWII may reach 30,000 points by 2026 after 22% year-to-date growth
- TSMC shares are up 39% YTD, largely unaffected by AI chip bias
- Experts warn that many portfolios are still too AI dependent
Investors do not appear to be deterred by threats of an ‘AI bubble’ in Taiwan, as the benchmark index (.TWII) approaches 30,000 points in 2026, having doubled in market value over the past three or so years.
Analysts largely agree that Taiwan is in a win-win position when it comes to AI because it supplies many of the critical components associated with AI architecture.
For example, Taiwan Semiconductor Manufacturing Company (TSMC) benefits whether the world is churning out Nvidia GPUs, Google TPUs or other alternatives.
Taiwan may be at the forefront of the AI wave
TSMC shares are up 187% over five years and 39% year-to-date already. Sector valuations are also generally considered reasonable, with Taiwan’s market P/E around 21, which is below the Nasdaq and Nikkei. This healthy figure is ultimately a reasonable way to ease concerns about an AI bubble.
AI and cloud growth is also far from over, with hyperscalers such as Amazon, Google and Microsoft all poised to spend more over the next few years to bolster Taiwanese manufacturing.
Despite international concern over an AI bubble, local sentiment remains positive – with Taiwan shares up around 22% year-to-date – in line with the Nasdaq. Still, foreign investors have unloaded about T$533.8 billion by 2025 due to trade uncertainty, AI risk concerns and profit-taking, per Pakinomist reporting.
And it looks like things are unlikely to change in the foreseeable future, with Taiwan’s winning formula (made largely under the influence of TSMC) difficult to replicate.
Still, while Taiwan has eased some worries about an impending AI bubble, strategists warn that any Asian portfolio is too concentrated around AI deals, especially TSMC, which would amplify the effects of any market swings.
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