Experts: AI Semiconductors Propel Taiwan Stocks Toward 50,000 Points, but Leverage Risks Warrant Caution

(CNA reporter Hsieh Yi-hsuan, Taipei, 16th) Cathay United Bank's Chief Economist Lin Chi-chao stated that global capital expenditure has increasingly shifted toward AI in recent years, enabling Taiwan to leverage its semiconductor supply chain strengths for export growth. As a result, the Taiwan stock market may advance beyond the 50,000-point mark. However, he emphasized the need to monitor the widening 'K-shaped recovery' gap between the electronics and traditional sectors, as well as the risks posed by excessively high market deviation rates.

Lin spoke today at the '2026 Second-Half Global Economic and Market Outlook' briefing, identifying three core issues for global markets in the second half of 2026: Middle East conflicts, monetary policy, and AI-driven supply chain restructuring. The Middle East conflict has heightened inflation concerns, prompting major central banks to adopt a more hawkish stance than at the beginning of the year. Fortunately, the recent U.S.-Iran peace agreement has temporarily eased geopolitical tensions. Meanwhile, the AI investment wave continues to expand, accelerating the reshaping of global supply chains, with Taiwan positioned as a major beneficiary.

Lin noted that the AI trend continues to dominate global capital flows, particularly evident in the stock markets of Taiwan and South Korea. Taiwan's stock market has repeatedly hit new highs amid sustained economic growth, driven primarily by structural shifts in capital expenditure. Over the past two decades, U.S. capital spending was largely concentrated in the energy sector, with limited relevance to Taiwan. In recent years, however, the focus has shifted to the technology sector, especially GPUs and CPUs required for data centers—components predominantly manufactured in Taiwan.

He highlighted a global supply chain 'Great Reshaping' trend, positioning Taiwan as one of the biggest beneficiaries. Taiwan's annual economic growth rate could approach 10%.

Lin stated that semiconductor sales are closely tied to capital expenditure. Global semiconductor sales this year are projected to reach a record high of nearly $1.4 to $1.5 trillion, explaining Taiwan's superior performance in both its real economy and financial markets compared to previous years.

Regarding the stock market, Lin noted that strong AI demand continues to drive revenue growth in Taiwan's electronics industry. Exports this year are expected to reach $900 billion, with a potential to surpass $1 trillion next year.

On corporate earnings, he projected that listed and OTC companies in Taiwan will see profit growth of over 53% this year and over 28% next year. After-tax net profits could challenge NT$7 trillion this year and NT$9 trillion next year, providing solid support for the stock market's long-term performance. Based on a price-to-earnings ratio of 21 to 22 times, this suggests the Taiwan stock market could aim for over 50,000 points within the next year.

However, Lin pointed out that multiple countries, including Taiwan, South Korea, Vietnam, and Singapore, are currently experiencing K-shaped recoveries. He explained that Taiwan's electronics sector accounts for 70% of exports, leading to a widening performance gap between electronics and non-electronics industries. The primary reason is that non-electronics sectors face challenges from China's overcapacity, while AI-related electronics benefit from high technological barriers and the fact that most chips and servers are manufactured in Taiwan, giving them a competitive edge.

When asked whether SpaceX's potential IPO might create a crowding-out effect on AI-related stocks, Lin noted that while its market cap is large, the number of shares released would be limited, resulting in relatively constrained impact. However, with multiple companies preparing for IPOs in the second half and strong fundraising demands from NVIDIA and cloud service providers (CSPs), capital could become highly concentrated in large AI firms, potentially pressuring non-AI small and medium-sized enterprises.

Lin emphasized that due to strong fundamentals, the current market deviation rate of the Taiwan stock market has exceeded 40%, the highest since 1990. An expanding deviation could increase market volatility, and investors should carefully assess the risks associated with leveraged trading. (Editor: Yang Kai-hsiang) 1150616