Taiwan’s tech-heavy equity market continues to defy global concerns over a potential artificial intelligence bubble, reaching new record highs as local investors bet on the island’s central role in the AI supply chain. Many anticipate the benchmark index will surpass the 30,000 level by 2026, extending a three-year rally that has nearly doubled market valuations amid surging demand for AI chips.
While foreign investors remain cautious about lofty valuations in AI hardware and rising competitive pressures, local market participants argue that Taiwan holds a unique structural edge. The island is not only the primary production hub for Nvidia’s GPUs but also a major manufacturing base for Google’s TPUs—two competing technologies that underpin modern AI computing. Regardless of shifts in industry dynamics, companies like TSMC are seen as long-term winners.
Robust earnings have further strengthened sentiment, keeping Taiwan’s equity market valuation at around 21 times earnings—still below levels seen in the Nasdaq or Nikkei. Local fund managers emphasize that today’s AI boom is fundamentally different from the dot-com era, as it is supported by strong profitability and tangible demand. Goldman Sachs echoes this view, stating that the sector shows no signs of a broad-based bubble.
Although uncertainties remain regarding AI’s long-term profitability and global adoption pace, analysts note that Taiwan’s substantial order backlog and dominance in high-end semiconductor manufacturing should sustain strong cash flow for years. Even with ongoing geopolitical tensions with Beijing, investors appear largely unfazed.