Heavy Foreign Selling Pushes Taiwan Stocks Below Quarterly Line
Taipei stocks saw a major shakeout on the 29th, with the benchmark index closing down 667.25 points at 46,368.33 points, falling below the quarterly line again. The three major institutional investors sold a net 816.66億元, including net selling of 688.15億元 by foreign investors. Meanwhile, Google parent Alphabet reported 2026 Q3 earnings, with free cash flow at negative 90.7億美元, about 新台幣2,940億元, negative for two consecutive quarters, sparking market concerns about overheated AI investment and a bubble.
Truth Behind Negative Cash Flow: Surging Capital Expenditure
In response, Moore Investment Consulting investment chief Guo Zherong analyzed that the core of current market anxiety is not deteriorating AI fundamentals, but the Middle East situation and the prolonged Russia-Ukraine war, which have driven crude oil and natural gas prices sharply higher and pushed up global inflation risks. To suppress prices, the Federal Reserve's high interest rate policy remains undecided, raising corporate financing costs, and Fed official Warsh also noted that rate-hike shocks to the funding chain of high-financing-demand AI companies are the main cause of tech stock volatility.
Regarding Google's Q3 free cash flow of negative 90.7億美元, Guo Zherong believes it is not because the AI business is unprofitable, but because capital expenditure expanded from the 2,000億美元 level to 3,000億美元 to fully advance AI infrastructure. He pointed out that international tech giants continue to expand data centers, so that Taiwan supply chains such as TSMC (2330) and Hon Hai (2317) can secure huge orders, and if the giants cut spending to beautify financial reports, it would instead be a disaster for the supply chain.
Sees 50,000 by Year-End, Names Three Low-Base Stocks
Guo Zherong said the current decline is a buying opportunity, expecting that once geopolitical conflicts show signs of peace talks, inflation and rate-hike concerns will fade and funds will accelerate back into the AI market. He is optimistic Taiwan stocks have a chance to charge to the 50,000-point mark before year-end, and over the next three years could challenge 62,000 to 100,000 points. Investors unable to withstand individual stock volatility can hold broad-market prototype ETFs long term, such as Yuanta Taiwan 50 (0050) or Fubon Taiwan 50 (006208), to share in economic growth.
On individual stocks, he advocates choosing low-base stocks over high-flyers. Faraday Technology (3035) won pure-AI and ASIC projects, with a single order worth tens of millions of dollars, surging to the daily limit and sparking a P/E re-rating; passive component maker Walsin Technology (2492) benefited from Japan's Murata Manufacturing's late-session rally and resisted the decline; mature-process leader UMC (2303) fell back to a low base, and if it pulls back to below 105 yuan, or even the 100 to 103 yuan range, it offers low-level layout appeal.