Post-Midterm Regulatory Concerns Send U.S. and Taiwan Stocks Sharply Lower
After the U.S. midterm elections, concerns over AI data center regulation, financing costs and the investment payback period intensified, sending major U.S. indexes broadly lower, with the Philadelphia Semiconductor Index plunging about 12%. Taiwan stocks today (6th) also at one point collapsed nearly 4,000 points intraday in a broad sell-off, with losses now narrowing to around 1,600 points. Markets worry that if data center construction is delayed by regulation and power constraints while operators still bear heavy capital expenditure and financing costs, revenue realization and investment payback could be deferred, affecting future investment capacity, concentrating short-term selling pressure on highly valued AI supply chains.
Democrats Control House and Senate, Trump Retains Veto Power
You Jingde, fund manager of the Nomura Taiwan Select Active (00980A), analyzes that after the Democratic Party took control of the House and Senate, markets began reassessing the policy direction on data center power usage, environmental and construction costs. However, Trump still holds presidential veto power, creating a political hurdle for major controversial bills, with specific measures and implementation timelines still to be seen. In addition, local government power regulations on data centers already exist, and some large cloud operators have already factored related costs into investment plans. Policy may change construction locations and schedules, but AI is tied to technology competitiveness, and long-term buildout demand remains supported.
Watch 3 Key Indicators, No Sharp Order Cuts Seen Yet
You Jingde points out that investors should watch 3 key indicators ahead, including cloud operators' capital expenditure guidance, supply chain orders and shipment progress, and whether AI applications can continue driving real revenue. According to preliminary checks by the Taiwan stock team, no sudden order cancellations or sharp adjustments have been seen so far, nor has there been a broad pullback in large cloud operators' investment plans, and short-term delivery delays must be distinguished from weakening end demand. As AI expands from model training to inference and agentic applications, demand for computing, memory and high-speed transmission is expected to grow. Whether Taiwan supply chains can translate technological advantages into orders and profits will be key to assessing medium- to long-term investment value.
Focus on High-Barrier Leaders, Build Positions via Regular Fixed Investments
You Jingde says short-term market confidence will still take time to recover, but for industry leaders with solid fundamentals and more attractive valuations after the pullback, investors can continue looking for entry opportunities. Positioning continues to focus on advanced manufacturing processes and advanced packaging, testing, thermal solutions, ABF substrates, CCL, PCB, networking, optical communications and server rails, prioritizing companies with high technology barriers, stable customer relationships and solid profit support, and adjusting holdings by valuation and order changes. Investors can stagger entry timing through regular fixed-amount investments based on their risk tolerance and funding plans, and add on dips after confirming fundamentals remain unchanged. Investing involves risks; please read the prospectus carefully before subscribing.