Taiwan has experienced a surge in its stock market, with the country’s stock benchmark reaching its highest level ever. The driving force behind this record-breaking performance is the expectation of a booming demand for artificial intelligence (AI) technology, which has greatly impacted investor sentiment.
Upon reopening after the Lunar New Year holiday, the Taiex index climbed by an impressive 3%, surpassing its previous peak in January 2022. The main contributor to this gain was a substantial 7.9% increase in shares of Taiwan Semiconductor Manufacturing Co. (TSMC), the largest stock in Taiwan and a significant provider of foundry services for Nvidia Corp., a leading AI technology company.
Investor interest in the AI theme has propelled the shares of chipmakers and other tech firms globally. The Philadelphia Stock Exchange Semiconductor Index also reached a new high recently, while Nvidia’s market capitalization has surged to approximately $1.82 trillion, surpassing tech giants like Amazon.com Inc. and Alphabet Inc.
TSMC’s positive outlook, coupled with the global tech recovery anticipated in 2024, has reinforced investor hopes and further boosted the company’s position. TSMC reported a 7.9% year-on-year increase in January sales, with the company accounting for around 30% of the Taiex index. Executives from TSMC recently met with Jensen Huang, CEO of Nvidia, to address AI chip supply constraints, a significant challenge hindering the AI boom.
“Taiwan has been driven by tech, especially the AI theme,” noted Xin-Yao Ng, an investment director for Asian equities at abrdn. “Nvidia has been a catalyst adding on to the sentiment, after Jensen Huang visited Taiwan, boosting investors’ appetite for AI value chain plays and Nvidia suppliers.”
The allure of potential gains in TSMC and other tech stocks has attracted substantial investments from international players. Foreign funds have bought nearly $14 billion worth of Taiwanese equities on a net basis since the end of October, according to data compiled by Bloomberg.
The remarkable performance of Taiwan’s stock market reflects the growing confidence in the long-term potential of AI technology. As the demand for AI continues to rise, companies like TSMC and Nvidia are at the forefront, leading the charge in developing and supplying cutting-edge solutions. With their strong market positions and strategic partnerships, these companies are poised to capitalize on the AI boom and fuel further growth in the sector.
In conclusion, Taiwan’s stock benchmark reaching a record high is a testament to the increasing importance of AI technology in today’s world. As investor sentiment remains positive and global demand for AI continues to surge, Taiwan and its tech companies are likely to remain at the forefront of this transformative industry.
