As selling in AI-related stocks continues, analysts point to three risks: weaker pricing power among AI models, infrastructure constraints, and higher interest rates. On the 3rd, Taiwan's TAIEX plunged 1,612 points to close at 43,307.
Citing Bloomberg, Taiwan's United Daily News (UDN) reported that Wall Street's favored AI stocks have been losing their ability to withstand selling for months. Early worries focused on heavily indebted smaller AI firms, but last week selling reached megacaps such as Alphabet and Amazon over weak free cash flow and below-expected revenue guidance. The tech-heavy Nasdaq 100 is more than 10% below its recent peak, a correction.
광고 문의 · 300×250Bloomberg Economics cited three risks. First, similar capabilities across frontier AI models could erode pricing power. Second, limits on permits, energy supply and regulation could slow capital spending. Third, further rate hikes would raise discount rates and weigh on valuations.
Analysts' warnings
The chief investment officer of OnePoint BFG likened the market to a series of earthquakes in which small cracks may add up to a collapse. A Nomura strategist said recent earnings exposed weaknesses in core businesses and raised doubts about sustaining AI chip and data center spending. Truist Wealth said US tech stocks could fall another 2% to 8%.
Taiwan stocks moved in step with the US tech weakness. UDN reported the Philadelphia Semiconductor Index fell 3.37%, Taiwan ADRs closed lower, and the TAIEX fell 3,727 points over four straight sessions. Foreign investors net sold about NT$107.3 billion, and institutions overall about NT$146.5 billion.
Taiwan's Financial Supervisory Commission attributed the volatility to international conditions, US tech earnings and geopolitical uncertainty, and said it would keep monitoring. No single cause of the drop has been confirmed, and analysts are split between a temporary correction and the start of a bubble burst. Reports also cite a still-high probability of a December Fed rate hike as another variable.
