Investors Back Taiwan’s AI Strength as Markets Eye Record Highs in 2026

Taiwan’s technology-driven stock market continues its strong upward momentum, even as global investors express concerns about a potential AI bubble. Local investors, however, remain confident in Taiwan’s long-term advantage in the artificial intelligence supply chain, an advantage they believe global markets may be underestimating. Taiwan’s benchmark index is projected to cross 30,000 points in 2026, continuing a remarkable three-year rally that has nearly doubled market value, powered largely by rising global demand for AI-related chips.

While foreign investors caution that AI valuations may be overstretched, domestic investors are pouring money into the market. Analysts say this confidence comes from Taiwan’s central role in powering the global AI ecosystem. As home to TSMC, the world’s largest contract chipmaker, Taiwan sits at the heart of the supply chain for both Nvidia’s GPUs and Google’s TPUs, two key components of AI computing. Even if competition between Nvidia and Google intensifies, Taiwan stands to benefit either way.

Market experts highlight that Taiwan’s growth is supported by solid earnings, keeping its price-to-earnings ratio around 21, lower than the Nasdaq and Nikkei. This suggests the rally is not excessively inflated. Industry leaders, including Uni-President’s Li Fang-kuo, argue that strong margins among major U.S. tech companies and solid profitability across the AI sector make current valuations sustainable, unlike the dot-com bubble.

Research from Goldman Sachs echoes this sentiment, noting that today’s conditions do not resemble a full-scale bubble. The firm expects heavy investments from global hyperscalers to continue in 2026 and 2027, likely pushing Taiwan’s main index further upward. Many analysts believe Taiwan’s semiconductor industry will remain a long-term winner as structural demand for high-end chips stays strong.

Despite Taiwan’s buoyant market, foreign investors have sold more than T$533 billion worth of shares this year, following large outflows in 2024. These exits are linked to uncertainties in global trade, concerns over AI profitability, and profit-booking. Still, sentiment around Taiwan remains widely positive. The island’s strategic importance in AI hardware production, combined with its dense network of suppliers close to TSMC, gives it a competitive advantage that is hard to match.

Taiwan’s market has risen 22% in 2025, on par with the Nasdaq, though it still trails other major Asian indices such as South Korea’s Kospi and Japan’s Nikkei. Even so, investors expect Taiwan’s index to reach 30,000 in early 2026, led by major players like TSMC, Foxconn, and Elite Material.

Analysts agree that Taiwan’s semiconductor strength and its deep integration into the global AI value chain will keep driving growth, reassuring investors that the island remains indispensable to the future of AI technology.

Source: The Economic Times