Divergent US Earnings Drag Down Taiwan Stocks
Taiwan stocks swung violently again on the 29th, with the index plunging nearly 1,000 points under heavy selling pressure. After surging 939 points in the previous session, the market reversed sharply lower today. The Federal Reserve kept interest rates unchanged, in line with market expectations. Microsoft reported results better than market expectations, but Google revenue, EPS and free cash flow missed expectations, with free cash flow falling far short of expectations. Continued expansion of AI capital expenditure raised market 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, while profit-taking after the rebound added to the decline.
Samsung Profit Jumps 15 Times Yet Still Pulls Back
Samsung reported earnings in the morning, with semiconductor division profit reaching 106.5 trillion won, 15 times last year, but still slightly below market expectations. Shareholder return plans were delayed until next year, sending the shares down 5% and dragging Korean stocks lower, with Taiwan stocks also affected. Analysts noted that whether it was Google cash flow or Samsung 15-fold profit surge, both show AI demand remains strong, and the short-term pullback reflects earnings and positioning rather than a reversal in demand.
UMC Oversold While Memory Stocks Turn Higher
On individual stocks, UMC plunged after its earnings call. Analysts believe if the share price falls below NT$120, the estimated P/E would drop below 15 times, indicating oversold conditions. Memory stocks including Winbond, Nanya and Phison opened low and moved higher, turning positive against the trend and showing relative resilience. Analysts noted that some stocks alternating between limit-up and limit-down days mostly reflects positioning factors, and investors should avoid chasing highs and selling lows. As long as earnings continue to be revised up, valuation remains low, and the share price has fallen below quarterly and annual moving averages, it counts as severely oversold.
Focus on War, Oil Prices and Long-Term Targets
Looking ahead, analysts cited Musk comments on memory shortages and Samsung statement that supply shortage may last until 2028, expecting memory to return to glory. Fed Chair Warsh noted 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. If war pushes oil prices higher and intensifies inflation pressure, the Fed may face pressure to raise rates, pushing up corporate financing costs and affecting AI investment and tech stock momentum. Therefore whether the US-Iran conflict and Russia-Ukraine war can end will be key for AI stocks and Taiwan stocks. Institutional investors stressed that once oil price and inflation pressures ease, companies are expected to invest with greater confidence. The long-term view on Taiwan stocks is maintained, targeting 50,000 points this year, 62,000 next year, and 100,000 within three years.