Taiwan Stocks Hit New Highs in First Half; Analysts See Potential for 50,000 Points Amid Increased Volatility

Taiwan's stock market has reached new heights, closing the first half of 2026 above 46,000 points. Analysts are optimistic about the second half, with some predicting a push towards 50,000 points, driven by strong AI sector growth and Taiwan's crucial role in the global supply chain.

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The trend of AI capital expenditure continuing to hit new highs in 2026-2027 has high certainty and will continue to boost demand for related supply chains.

Experts point to the sustained high capital expenditure in AI through 2027 as a key driver for demand in related industries. This trend underpins a long-term bullish outlook for the market. However, rapid gains have led to increased volatility, prompting a shift in investment strategy. Investors are advised to focus on buying during dips and carefully selecting individual stocks rather than chasing rapid price increases.

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With the rise of Agentic AI, Taiwan's supply chain is crucial. In computing, GPUs provide computing power, while CPUs act as schedulers for workflows and tasks.

Key sectors to watch include advanced manufacturing processes, packaging, ABF substrates, PCBs, CCL, high-efficiency power management, cooling solutions, and optical communications. The rise of Agentic AI is also boosting demand for CPUs, which play a critical role in task management. Despite the positive outlook, potential interest rate hikes by the U.S. Federal Reserve could exacerbate market fluctuations.

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The probability of the Federal Reserve cutting interest rates has significantly decreased, which may lead to increased market volatility.

Analysts suggest rebalancing portfolios by reducing holdings in overvalued stocks and increasing positions in companies with positive operational outlooks and clear growth trajectories. The semiconductor testing, ASIC design, and broader semiconductor industries are particularly favored. The ongoing expansion of the AI industry, coupled with TSMC's 2nm process mass production and advancements in areas like silicon photonics, are expected to further fuel demand for cooling, optical communications, and CPO supply chains.

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Benefiting from the continuous expansion of the AI industry, TSMC's 2nm process mass production, and long-term themes such as advanced packaging and silicon photonics, it is estimated that the Taiwan stock index will range between 43,000 and 53,000 points in the second half of 2026.