Taiwan Stocks Plunge Over 1,000 Points Amid AI Profitability Concerns and Heavy Selling

Taiwan’s stock market faced a severe selling wave today, with the Weighted Stock Index opening lower and continuing to decline throughout the session. At its intraday low, the index dropped by more than 1,600 points. Although the decline moderated somewhat in the final hours of trading, the index closed down 1,156.5 points at 45,211.83. This sharp sell-off pushed the benchmark below the 45,314-point six-month moving average, a level widely regarded as the dividing line between medium-term bullish and bearish trends. Fortunately, the index found some support just above the psychological threshold of 45,000 points, barely holding this critical defense line. Dragged down by today’s plunge, the Taiwan Stock Exchange’s weekly chart recorded its third consecutive weekly loss, while the monthly chart also confirmed a decline, indicating clear corrective pressure in the short-term market structure.

The primary catalyst for this dramatic volatility and sharp drop in the Taiwan stock market was deepening concerns in global financial markets regarding the monetization potential of artificial intelligence (AI) investments. Over the past period, global tech capital has poured heavily into AI-related infrastructure, chip development, and server manufacturing. However, as the scale of capital expenditure continues to expand, the market has begun to scrutinize when these massive investments will translate into tangible profits and revenue. These underlying concerns spread rapidly after U.S. tech stocks initially weakened, triggering a correction in high-valuation technology stocks among international investors. As a core hub in the global AI hardware supply chain, Taiwan was inevitably hit hardest, bearing the weight of heavy selling pressure from international capital markets.

In today’s trading, heavyweight and high-priced stocks faced broad withdrawal pressure, with AI concept stocks showing the weakest performance. Electronics stocks, including several flagship companies, became the primary targets for adjustments by foreign and domestic institutional investors. Market sentiment bellwethers such as Delta Electronics, Hua Xin Technology, and AU Optronics all ended trading locked at the daily limit down amid massive selling pressure. This reflected a risk-averse strategy among investors, who chose to sell first amid rising uncertainty. With the exception of a few defensive sectors, the electronics sector suffered near-universal losses. Shares in electronic components, panels, and related supply chains performed poorly, dragging down the Weighted Index and significantly denting investor confidence.

From a technical and position-holding perspective, the breach of the six-month moving average carries significant warning implications. The six-month line is typically viewed by the market as the average cost line for medium-term trends. Once the index effectively breaks below this level and fails to quickly reclaim it, it often signals that the medium-term bullish structure is facing a severe test, potentially shifting to a consolidation or medium-term correction pattern. Furthermore, the three consecutive weekly losses and the official turn to a monthly decline indicate that this pullback from highs is not a fleeting event but reflects a reality of loosening holdings and a more conservative stance among major institutional investors. Although the fundamentals of listed companies still provide some support, the market has clearly chosen to lower its risk appetite in response to concerns over high valuations and lengthening return periods.

Looking ahead, the key to whether bulls can stem the bleeding in the short term will be whether the Taiwan stock market can successfully establish a bottom around the 45,000-point level. Investors and institutions will closely monitor upcoming earnings reports and capital expenditure plans from U.S. tech giants, particularly the revenue contribution and future outlook of their AI-related businesses, which will directly impact the pace of valuation recovery for global tech stocks. Additionally, foreign investment trends in the futures and cash markets, the trajectory of the New Taiwan dollar exchange rate, and changes in domestic macroeconomic data will be crucial variables determining whether the Taiwan stock market can emerge from this gloom. Until market sentiment stabilizes, investors should maintain a high degree of risk awareness and proceed cautiously in managing the high volatility of the market.

(Source: Central News Agency)