Investment firms say AI’s long-term trend remains intact as Taiwan stocks pull back

Taiwan stocks could remain choppy in September, but investment firms say a pullback after the market’s sharp rise may help its longer-term performance.

The outlook reflects several pressures. Historical patterns point to weaker U.S. equities before congressional midterm elections, while 10-year U.S. Treasury yields above 4.5% weigh on technology valuations. The third quarter also offers fewer fundamental catalysts for the technology sector.

Even so, the long-term case for artificial intelligence remains unchanged. Market forecasts still project annual corporate earnings growth of more than 25% in 2026 and 2027. Through September 3, Taiwan’s weighted stock index had risen 58.33% for the year, placing it fourth among the five strongest-performing global markets listed by investment firms, behind Venezuela, Peru and the Philadelphia Semiconductor Index and ahead of South Korea.

Shen Chien-hung, manager of Taishin Taiwan Small and Mid Cap Active ETF, identified oil prices and the approaching U.S. midterm elections as two variables to watch. He said renewed concerns about interest-rate increases could emerge if oil prices fail to fall clearly. Election uncertainty could also keep U.S. stocks consolidating before the vote, although historical performance after midterm elections has generally been stronger. Taishin Investment Trust favored AI supply-chain companies, optical communications, semiconductor materials and equipment, U.S. factory beneficiaries, selected price-increase groups and high-dividend stocks.

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buy on weakness