Powered by chip stocks, Taiwanese equities emerged as one of the top performers among Asian markets, with the latest gains also helping the TAIEX move closer to reclaiming the top position from South Korea’s KOSPI.
Chip stocks have emerged as some of the biggest beneficiaries of aggressive spending by technology giants to scale up AI infrastructure. Since the artificial intelligence boom was ignited by OpenAI’s ChatGPT in 2022, global demand for chips has surged, pushing shares of Taiwan Semiconductor Manufacturing up more than 50% year-to-date.
As TSMC carries the largest weightage in the index, the rally has propelled the TAIEX to gain 54.55% in 2026, extending its winning streak to a fourth straight year.
However, the near-parabolic rally has turned volatile in recent weeks as investors question whether soaring valuations are justified, particularly amid /uncertainty over whether hyperscalers’ massive AI investments will generate sustainable returns. The index has consequently retreated around 7.2% from its June peak.
In July, foreign investors pulled $22.95 billion from Taiwanese equities, while the index suffered its biggest single-day point decline on record during the month.
When a small group of chipmakers accounts for an outsized share of a market’s gains, any reassessment of spending, margins, or competition can trigger unusually sharp capital outflows and heightened volatility.
The year-to-date rally in the TAIEX now trails South Korea’s KOSPI by just 6 percentage points, with the latter having gained around 60%. South Korea’s rally has been largely driven by Samsung Electronics and SK Hynix, although the KOSPI suffered a sharp reversal in July.
Analysts break down TAIEX’s AI-led rally and outline the key levels ahead
Nitant Darekar, Research Analyst at Bonanza, said Taiwan’s TAIEX has run from roughly 24,000 in August 2025 to about 44,800 now, close to an 85% gain, and the move is far narrower than the headline suggests.
He said TSMC alone carries more than 40% of market value and is up about 126% over the year, so the AI foundry cycle effectively is the index.
Strength then broadened into advanced packaging, ASIC, and power, with MediaTek up around 207%, alongside Delta Electronics, ASE, King Slide, and PCB and memory names.
Foxconn lagged badly near 35%, while plastics and textile counters trailed. Darekar said earnings upgrades, foreign inflows, and relaxed single-stock fund limits did the rest.
On the technical side, Mahesh M. Ojha, VP — Research & Business Development at KC Securities, said the TAIEX faces resistance at 45,400, followed by 45,650 and 45,800, while support levels are placed at 44,800, 44,500, and 44,200. The overall trend for the index remains bullish.
King Slide, MediaTek lead Taiwan’s 2026 rally as traditional stocks lag
Among the top performers in Taiwan’s stock market rally in 2026, King Slide Works emerged as a standout, with its shares surging around 280%.
MediaTek followed with gains of about 207%, while Delta Electronics was also among the major outperformers, benefiting from strong demand across the AI and power sectors.
TSMC shares gained around 56%, while ASE Technology Holding also posted strong gain of 135%, supported by the AI semiconductor and advanced packaging cycle.
On the other hand, Foxconn, also known as Hon Hai Precision Industry, emerged as a relative underperformer, rising around 35% but significantly lagging the broader AI-led rally.
Plastic and textile-sector stocks were also among the weakest-performing groups, while traditional manufacturing counters generally trailed the technology-led advance. Selected non-AI cyclical stocks likewise remained relative underperformers compared with semiconductor, AI, and other technology-related names.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
