Divergent US Earnings and Profit-Taking Drag Down Market
Taiwan stocks saw sharp volatility again on the 29th, with the index plunging nearly 1,000 points and heavy selling pressure. After surging 939 points the previous day, the market reversed lower, mainly affected by divergent US tech earnings, a pullback in Samsung shares, and profit-taking after the rebound. Although the Federal Reserve kept interest rates unchanged as expected and Microsoft reported better-than-expected earnings, Google's revenue, EPS and free cash flow missed expectations, with free cash flow coming in well below expectations, while continued expansion in AI capital spending raised doubts about investment returns, becoming a key drag on Taiwan stocks. The market may also be pricing in uncertainty ahead of the US midterm elections in early November.
UMC Oversold as Memory Stocks Rebound
On the individual stock front, UMC plunged after its investor conference; if the share price falls below 120, the estimated P/E ratio will drop below 15 times, which is already oversold. Winbond, Nanya Technology and Phison opened low and moved higher to close in positive territory, remaining optimistic. Other stocks saw alternating limit-up one day and limit-down the next, mostly due to chip-flow factors, and chasing highs and selling lows should be avoided. As long as individual company earnings continue to be revised upward, P/E valuations are relatively low, and share prices have fallen below quarterly and annual moving averages, they are already severely oversold.
Samsung Profit Up 15 Times, Shortage to Last Until 2028
Samsung reported earnings in the morning, with semiconductor division profit reaching 106.5 trillion won, 15 times last year's level, but still slightly below market expectations, while its shareholder return plan was delayed until next year for a decision, causing its share price to pull back 5% and drag down Korean stocks, with Taiwan stocks also affected. However, whether it is Google's cash flow or Samsung's 15-fold profit surge, both show AI demand remains strong. Musk said memory is in short supply, and Samsung also said the supply shortage could last until 2028. Despite Samsung's weakness, memory stocks remained relatively resilient, and the outlook remains positive for memory to return to glory.
Oil Prices, Inflation and Financing Costs to Shape AI Outlook
Looking ahead, the Federal Reserve kept interest rates unchanged, in line with market expectations, but Chair Warsh pointed out the key that the more companies rely on external financing, the greater the impact of interest rates on investment decisions, and the AI industry is no exception. War has pushed up oil prices, oil prices have added to inflation pressures, the Federal Reserve may face pressure to raise rates, corporate financing costs will rise, in turn affecting AI investment and tech stock growth momentum. Therefore, whether US-Iran tensions and the Russia-Ukraine war can come to a smooth end will be a key factor affecting AI stocks and Taiwan stocks. Once oil price and inflation pressures ease and rate-hike risks decline, companies will be more confident to expand investment, and the AI industry is expected to continue to benefit. The long-term view remains unchanged, challenging 50,000 points this year, 62,000 next year, and 100,000 within three years.