Taiwan’s Stock Market Hits Sky-High Records—Is Your Portfolio Missing Out on This AI Gold Rush?

Taiwan's stock market made headlines yesterday as the TAIEX index posted a remarkable daily gain of more than 1,700 points, closing at an all-time high of 40,705.14. This surge, which represents a gain of 1,778.51 points or 4.57 percent, was largely driven by strong performances from major semiconductor companies, including Taiwan Semiconductor Manufacturing Co (TSMC) and MediaTek Inc. The optimism surrounding artificial intelligence (AI) developments has played a critical role in this remarkable shift.

The index fluctuated throughout the day, hitting a low of 39,228.39 and a high of 40,755.52. Notably, the New Taiwan dollar also saw a positive shift, closing up NT$0.038 at NT$31.610 per US dollar, bringing an end to three consecutive sessions of decline.

Trading volume was substantial, with turnover on the main board reaching NT$1.007 trillion (approximately US$31.9 billion). Foreign institutional investors were particularly active, purchasing a net NT$66.98 billion worth of shares, marking this as the sixth-largest net purchase on record. Domestic investment trust firms and proprietary traders contributed to the momentum as well, buying a net NT$2.12 billion and NT$8.94 billion, respectively, according to Taiwan Stock Exchange data.

Analyst Kerry Huang from Concord Securities Co attributed the surge in semiconductor stocks to significant capital expenditures announced by major US cloud service providers (CSPs) aimed at bolstering their AI infrastructure. Last week, the four major US CSPs—Alphabet Inc's Google, Amazon.com Inc, Microsoft Corp, and Meta Platforms Inc—announced a combined capital expenditure of US$725 billion for the current year, reflecting a staggering 77 percent increase year-on-year.

This bullish sentiment was further fueled by solid earnings reports from tech giants, contributing to the S&P 500 Index's record-breaking streak of five consecutive weeks of gains. Huang noted, “

TSMC is the largest beneficiary of the trend, so investors rushed to pick up shares, driving the TAIEX sharply higher.”

TSMC, which constitutes over 40 percent of the total market value, experienced a notable rise of 6.56 percent, closing at NT$2,275. This alone added approximately 1,110 points to the TAIEX’s ascent. Meanwhile, MediaTek saw its shares soar by 10 percent, the maximum daily increase, as it positions itself to benefit from demand for AI devices due to its development of application-specific integrated circuits.

Other notable performers included Nanya Technology Corp, which surged by 10 percent amid supply shortages, and ASE Technology Holding Co, which also gained 10 percent on the back of robust AI applications. The trend extended beyond the semiconductor sector, with Hon Hai Precision Industry Co, an iPhone assembler and AI server manufacturer, gaining 3.64 percent, and Quanta Computer Inc, another AI server supplier, increasing by 1.76 percent.

The electric machinery sector also experienced growth, driven by the increasing need for resilient electricity supply infrastructure to support AI innovations. Companies like Shihlin Electric & Engineering Corp and Allis Electric Co saw gains of 6.3 percent and 10 percent, respectively.

As investor confidence appears to be rebuilding, equity analysts suggest that the market’s focus will soon shift to revenue data for last month and first-quarter financial results from these companies. This could provide additional insights into the sustainability of the recent market rally and the broader implications of AI investments in Taiwan's economy.