Taiwan stock bulls are strong, investment: AI small and medium-sized stocks have become the new mainstream

Investment Letter said that AI small and medium-sized stocks have become the new mainstream of Taiwan stocks. (The picture shows a file photo)

[Reporter Wang Menglun/Taipei Report] Taiwan stocks continue to strengthen, with only 287.96 points left from the 50,000 point mark, and bulls have made a strong statement. According to statistics, among the 50 largest market capitalization companies listed on the Taiwan Stock Exchange, the proportion of small-capitalization companies (with paid-in capital of less than 8 billion) has doubled from about 20% in 2023 to 40% in 2026. Investment industry players said that with the spread of the AI ​​community, more and more small-capitalization companies are standing on the trend wave, driving revenue and stock prices to soar rapidly.

Taiwan stocks staged a strong bullish trend. They opened higher today and ended up rising by 1,236.30 points to close at 49,712.04 points, a single-day increase of 2.55%.

Taishin Investment Trust is optimistic that small and medium-sized potential stocks will become the leader in leading Taiwan stocks to challenge new highs in 2027. It has specially launched the first active Taiwan stock ETF focusing on domestic small and medium-sized potential stocks, "Taishin Taiwan Small and Medium-sized Active ETF Fund (00416A)". It started a grand fundraising today (10/5) to allow investors to participate in the explosive market of small and medium-sized stocks.

Shen Jianhong, manager of Taishin Taiwan Small and Medium-sized Active ETF Fund (00416A), said that the second-quarter financial reports of Taiwan-listed companies have turned in brilliant results, and the market continues to revise up the profit growth of Taiwan-listed companies. According to the latest forecasts, the EPS growth rates of Taiwan-listed stocks in 2026 and 2027 are estimated to be as high as 67.2% and 29.7% respectively, providing confidence for Taiwan-listed stocks to hit record highs in the future.

However, looking further, Taishin Investment Trust said that EPS growth in 2027 will be relatively slower than in 2026, which means that next year’s index returns may not be the same as this year, and the investment style will shift from Beta (linked to the market) to Alpha (excess returns), which will be dominated by the performance of small and medium-sized niche stocks.

Shen Jianhong pointed out that corporate profit growth is often the wind direction of the stock market, and companies with higher profit growth will also enjoy higher price-to-earnings ratio evaluations. Taiwan's small and medium-sized stocks with AI supply chain advantages have strong profit growth. The explosive stock price in the past three years has far exceeded that of the broader market and weighted stocks. The top 30 Taiwanese stocks in the past three years are all stocks with a share capital of less than 8 billion, such as Qihong, Taiwan Optoelectronics, Wangsi, Taiyao, etc.

According to legal person analysis, in terms of market outlook, the trend of AI rising together has passed, and various industries will differentiate in the future, and the base period has been raised. Growth is not as good as in the early stages of development, and managers need to select holdings. Therefore, investors can increase their winning rate by arranging active ETFs for small and medium-sized Taiwan stocks.