Taiwan's Tech Surge Boosts Stocks With Rising AI And Semiconductor Demand

On Friday, Taiwanese stocks soared to new heights, driven by the burgeoning demand for artificial intelligence (AI) and semiconductor technology. This trend is expected to continue, according to market analysts.

What Happened: The Taiwan Weighted Index reached an intraday peak of 20,296 before receding, as reported by CNBC.

According to Paul You, chairman of First Securities Investment Corporation, the index is projected to rise to 24,000 by the end of the year.

You attributed the global AI demand to the robust performance of the Asia-Pacific tech sector, which has been thriving amid global macroeconomic uncertainty. This has set the stage for an economic boom in Taiwan, which boasts a robust AI service manufacturing supply chain.

Leading the charge is chip giant Taiwan Semiconductor TSM, the primary contract chip manufacturer for Nvidia, whose stock has surged over 30% this year. Other Taiwanese firms, such as Quanta Computer QUCCF and Wistron WICOF, have also significantly increased.

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Another factor contributing to the stock rally is the rise in fixed asset investment following the January elections, which initially caused some uncertainty, said Alicia Garcia-Herrero, Chief Economist for Asia Pacific at Natixis.

"I would expect a very strong year, stock market-wise, and also because we're expecting cuts from the Fed," she added.

Why It Matters: The Taiwanese stock market’s record performance aligns with the global trend of AI and semiconductor technology driving market growth. This is evident in the strong performance of companies like Nvidia, which has seen a surge in options trading, sparking concerns about a potential bubble.

The AI sector’s investment boom, particularly in AI-themed ETFs, has been driven by the strong market performance of companies like Nvidia, with the total value of AI-themed ETFs traded in the U.S. rising to $6.88 billion as of February end, according to Morningstar data.

Industry leaders like Jamie Dimon have also emphasized the real potential of the AI boom, dismissing it as mere hype and predicting that it will significantly impact various aspects of our lives.

Furthermore, Jensen Huang, CEO of Nvidia, has forecasted that the current AI computing ramp is just the beginning and is expected to continue for several years, particularly in sectors like healthcare.

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