US Tech Earnings Spark AI Panic, Taiwan Stocks Come Under Pressure

蔡蔡欣怡 理財線記者2026-10-31 10:18

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US tech giants' earnings raised concerns over AI capital spending and cash flow, with the Philadelphia Semiconductor Index plunging 7.2% and Intel crashing 28.59%. Hsieh Chin-ho said Taiwan stocks will inevitably follow in the short term, but Taiwan plays a picks-and-shovels role in the supply chain so the impact is relatively limited, with election variables in focus ahead.

US Stocks Plunge as PHLX Semiconductor Index Tumbles, Market on Alert

All four major US stock indexes closed lower on Friday the 30th, with the Philadelphia Semiconductor Index falling 829.4 points, or 7.2%. Wealth Media Chairman Hsieh Chin-ho wrote on Facebook on the 31st on the theme of AI panic, noting that as US tech giants reported earnings, the market worried about weaker-than-expected outlooks, deteriorating free cash flow, credit default swaps climbing to highs, and layoffs tied to AI development, triggering market panic. He said that with global stock markets flashing warnings again over two days, Taiwan stocks will inevitably be hit by the correction in US tech stocks in the short term.

Heavy Capital Spending Raises Doubts Over Returns

Hsieh said Google reported results that were not bad, but its shares plunged 12.29% as growth in its search business slowed. On the same day, Amazon also reported results, with free cash flow over the past 12 months reaching US$42.36 billion, and that figure spooked Wall Street and drove the US market selloff. He noted that the market fears massive AI capital spending is draining companies' cash to buy computing power without delivering commensurate returns, while free cash flow net outflows intensify. In addition, credit default swaps for Microsoft and Google have hit record highs, which he sees as market fear as AI hits the halfway mark.

Intel Plunge Drags Semiconductor Peers

Hsieh said Intel then reported results, with revenue declining on an explosion at its Israel plant, softer consumer electronics and an ABF substrate shortage, while free cash flow still failed to turn positive, sending the stock plunging 28.59%. The drop wiped US$140 billion off its market value, returning it to its April starting point, and marks a 54.7% fall from this year's high of US$142.35. It also hit the global semiconductor industry, with Qualcomm tumbling more than 10% and the Philadelphia Semiconductor Index plunging more than 7%, with far-reaching effects on Taiwan, a tech island centered on semiconductors.

Taiwan's Picks-and-Shovels Role Limits Impact

Hsieh said the large-scale layoffs triggered by AI, including Microsoft's latest job cuts, have worried the market, while many Democratic candidates in the US midterm elections are anti-AI. The US market's decline ahead of the midterms appears to be pricing in the possibility that Trump could lose control of the House and Senate, with a significant chance of a Republican defeat. He said Taiwan is a major beneficiary of the AI wave, so noise on the AI track will affect Taiwan stocks, but Taiwan plays a picks-and-shovels role in the AI supply chain, so the impact is relatively limited.

FAQ

Why did Google and Amazon earnings spark market panic?

The main cause was not a sharp earnings slump, but slowing growth in Google's search business, which sent its shares down 12.29%; Amazon posted US$42.36 billion in free cash flow over the past 12 months, fueling worries that huge AI capital spending is draining cash without commensurate returns, while record-high credit default swaps for Microsoft and Google deepened concerns.

Why did Intel plunge 28.59%?

Hsieh noted that Intel was hit by an explosion at its Israel plant, weaker consumer electronics and an ABF substrate shortage, hurting revenue, while free cash flow still failed to turn positive. The stock plunged 28.59%, wiping US$140 billion off its market value, down 54.7% from this year's high of US$142.35, and dragging down semiconductor peers such as Qualcomm.

What is the real impact of the US correction on Taiwan?

Hsieh believes Taiwan, as a major beneficiary of the AI wave, will inevitably be affected by the US tech correction in the short term, especially given its semiconductor-heavy market, with far-reaching effects. But Taiwan plays a picks-and-shovels role in the AI supply chain, so the longer-term impact is relatively limited.