Taiwan stocks defy AI bubble fears, seen hitting 30,000 by 2026

TAIPEI/SINGAPORE, Dec 12 (Reuters) - Taiwan's technology-focused stock market shows little sign of slowing its upward trend, even as concerns about an AI bubble cast uncertainty over global markets. This demonstrates strong local confidence in Taiwan's structural advantages in artificial intelligence that foreign investors may have underestimated. The benchmark index is projected to reach a record 30,000 points by 2026, extending a three-year surge that has nearly doubled the market value as Taiwan benefits from booming demand for AI chips. While international investors worry about stretched AI valuations, Taiwanese investors have been enthusiastically investing in their market. Analysts note that domestic investors are betting on Taiwan's unique position as the critical hub of the AI supply chain, where increased competition in the sector would actually benefit Taiwanese companies like TSMC, the world's largest contract chipmaker. Concerns about AI primarily stem from questions about Nvidia's ability to maintain market dominance, with Google's tensor processing units (TPUs) emerging as a potentially more cost-effective alternative to Nvidia's graphics processing units (GPUs). However, this creates a win-win situation for Taiwan since the island is essential to supply chains for both GPU and TPU technologies, which are fundamental to AI computing power. Taiwan's market gains are supported by earnings growth, maintaining a relatively stable price-to-earnings ratio of 21, which is below that of the Nasdaq and Nikkei, indicating that the rally hasn't made stocks overpriced. Both local investors and Goldman Sachs analysts don't see current conditions constituting a full bubble, contrasting it with the dot-com era when companies lacked substantial earnings.