Taiwan Stock Market 6600 Yen Barrier Breached: Rational Restructuring Behind the AI Valuation Crisis

Today, the Taiwan stock market quickly fell into trouble after opening. The weighted index gapped down and continued to weaken, touching a low of 27,684 points during the session, marking the eighth-largest decline of the year, and entering a fierce battle around the 28,000 integer level. This wave of decline may seem sudden, but it actually reflects a rapid shift in market expectations following the earnings reports of US tech giants.

Collective Pullback of Blue-Chip Stocks, High-Price Stocks Hit Hard

TSMC opened down 30 yuan to 1,450 yuan, with ADR plunging 4.2%, breaking below the key support of the monthly moving average. Large-cap stocks like MediaTek and Hon Hai also declined across the board, with electronics stocks suffering the deepest losses, down 1.8%.

The stock king, Xinhua, saw intense battle around the 6,600 yuan mark, briefly dropping to 6,590 yuan during the session before finding support and closing in the red. The performance of this high-priced stock influences overall market confidence—when leading stocks cannot hold their gains, the selling pressure from retail investors and institutions begins to surface.

Notably, Jingce bucked the trend, rising 8% to a new high of 2,370 yuan. Benefiting from extended inventory cycles for next-generation smartphones and high-end tablets, the company’s revenue for the first 11 months reached 4.415 billion yuan, up nearly 40% year-over-year, with expectations of double-digit growth for the full year remaining intact.

Deep Shift in Market Psychology

On the surface, this appears to be a collective correction in the AI sector. In reality, it reflects a re-evaluation by investors of the valuation logic across the entire AI industry chain.

Over the past two years, the AI concept alone was enough to support stock prices; as long as companies announced order growth, capital would flood in. But when Broadcom revealed in its earnings report that AI-related orders would surpass 73 billion USD in the next 18 months, only to see its stock plunge 11.43% in a single day, the market began to ask sharper questions: When will these orders translate into actual profits?

Oracle holds 523 billion USD worth of orders, of which 300 billion USD come from OpenAI. Wall Street analysts began to doubt whether these seemingly huge orders carry realization risks. Oracle’s new co-CEO attempted to reassure the market, claiming that even if OpenAI defaults, infrastructure could be redistributed within “hours.” This statement instead exposed the core issue: OpenAI may face difficulties in handling such a massive order load.

Capital Re-Aligns

The most insightful aspect of today’s market is the subtle change in capital flow. Oil, electricity, and electrical equipment stocks led gains, rising 3.09%; networking and shipping stocks rose 1.33% and 1.25%, respectively; while glass, other electronics, and semiconductor sectors collectively declined.

This is not capital fleeing the stock market, but rather a shift from “crowded midstream AI supporting industries” to “assets with clear cash flow and valuations not driven to extremes.” Investors are voting with their feet, favoring companies that do not rely on a single client and have transparent profit models.

Meanwhile, the life insurance industry is forced to sell holdings due to the upcoming implementation of IFRS 17 next year. This selling pressure is not driven by pessimism about fundamentals but by passive adjustments due to accounting system changes. Once classified as FVOCI, the book gains from stock sales cannot enter the profit and loss statement but can only be recorded in capital reserves, cutting off the previous means of beautifying EPS.

Who Are the True Winners

Google possesses what OpenAI most desires: stable cash flow and a complete industry chain. By 2026, its capital expenditure accounts for only 56% of operating cash flow, making it the most efficient among tech giants. This vertical integration provides extreme cost advantages—Google’s TPUv7 total cost of ownership is about 44% lower than NVIDIA’s GB200 servers.

In contrast, companies deeply tied to OpenAI—Oracle, SoftBank, Microsoft, NVIDIA—have seen their stock prices come under pressure since late October. This is no coincidence; the market is re-evaluating the risks of dependence on a single major customer.

Adjustment or Bubble

From a medium- to long-term perspective, the sharp decline in the AI sector is not a bubble burst but a necessary step toward market maturity. Differentiation will become the norm: companies lacking core technology, with single customer structures, and no substantial profitability will face ongoing valuation compression; while leading companies with technological moat, solid profitability, and diversified customer bases will stand out through rational selection.

When the 6,600 yen level is broken, the market is undergoing a painful but essential valuation reorganization.