Fubon 2026 Outlook Forum: AI Wave Helps Taiwan Stocks Eye 15,000

Taiwan stocks gained 10,000 points in just four months in 2026, pushing the Buffett indicator—the market's capitalization relative to gross domestic product—to 500%, far above the 200% overheating threshold. Failed trade settlements also hit a seven-year high. While the market is concerned about a valuation bubble, institutional investors say profits in the AI supply chain, expanding exports and changes in trading patterns provide fundamental support for the rally.

Business Today reported on July 6 that Ministry of Finance data showed exports had risen for 31 consecutive months through May. Electronics stocks accounted for 82% of the broader market's capitalization on June 12. Daily turnover reached NT$1.9 trillion in late May, while M1B stood at nearly NT$30.7 trillion. Ko Hung-min, manager of the Schroder Taiwan LOHAS Small and Mid Cap Fund, cautioned that a warning from the Buffett indicator could precede an actual decline by two to three years.

Cathay United Bank chief economist Lin Chi-chao said generative AI is reshaping global supply chains and driving revenue growth and demand for Taiwan’s electronics industries, including servers and semiconductors. Given the sector’s heavy weighting in the market, whether these companies can sustain earnings growth will directly affect the fundamental case for Taiwan stocks to challenge 50,000.

In his outlook for the second half of 2026 on July 20, Lin said AI demand was expected to support Taiwanese corporate earnings this year and next, giving the benchmark index a chance to break above 50,000. However, he warned of short-term pullbacks and valuation corrections if share-price gains significantly outpace earnings growth or technical indicators become excessively stretched.