Taiwan's stock market extended its strong artificial intelligence-fueled rally in April, with investors pouring into semiconductor and technology shares as AI demand continued lifting exports and economic growth. According to reports from Bank of America, the TWSE Index climbed 22.7% month-over-month to 38,926.63 and is now up 34.4% since the start of the year. Technology stocks remained the main driver of trading activity, accounting for 79% of total turnover during the second quarter to date, while average daily turnover surged 187% year-over-year to about $38.9 billion.
The market rally coincided with Taiwan's strongest economic performance in decades, with first-quarter GDP growth reaching 13.7% year-over-year, marking the fastest pace recorded since 1987. As reported by Bank of America, this growth was largely supported by AI-related exports, with March exports jumping 61.8% from a year earlier and reaching a record monthly high of $80 billion as shipments tied to advanced computing and semiconductor supply chains accelerated. Taiwan's total stock market capitalization also rose 18% in April to $4 trillion, with technology companies making up more than four-fifths of the market.
Investor activity has intensified across leveraged trading and exchange-traded funds, with margin loan balances climbing 23% month-over-month to a record NT$641 billion as investors increased exposure to Taiwan's AI and semiconductor sectors. According to reports, Taiwan-listed ETFs attracted NT$1.5 trillion in new assets this year, while active long-only funds maintained near-record overweight positions on Taiwan equities in March. Semiconductor companies remained the most favored sector among institutional investors, with companies linked to advanced chip manufacturing, AI servers, and cloud infrastructure seeing rising demand.
The latest gains highlight how central Taiwan has become to the global AI supply chain, with companies linked to advanced chip manufacturing, AI servers, and cloud infrastructure seeing rising demand as firms worldwide race to expand AI computing capacity. As reported, NVIDIA's continued dominance in AI processors has helped strengthen sentiment toward Taiwan's semiconductor ecosystem, particularly suppliers connected to high-end chip packaging and production. The AI spending wave continues to reshape global markets beyond Taiwan, with Microsoft, Amazon, Meta, and Google announcing plans to invest billions of dollars into AI data centers and computing infrastructure this year.
Despite the strong performance, signs of overheating are beginning to draw attention, with consumer inflation accelerating to 1.74% in April from 1.2% in March, partly driven by higher energy costs. The Taiwan dollar also appreciated against the U.S. dollar during the month as foreign capital continued flowing into local equities. Analysts expect demand for advanced semiconductors and AI hardware to remain strong through 2026 as companies expand cloud and generative AI services worldwide, supporting the continued rally in Taiwan's technology sector. However, recent market volatility in South Korea, where shares had earlier dropped as much as 3.2% before recovering, reflects the challenges facing AI-driven markets amid broader economic uncertainties.
