A sharp pullback in U.S. semiconductor stocks rattled Taiwan's equity market this week, but analysts are pointing to two structural support levels that suggest the sell-off may represent a buying opportunity rather than a trend reversal. Underlying AI demand, they argue, remains firmly intact.
What Triggered the Drop
The immediate catalyst was Broadcom. Despite reporting strong quarterly results, the Philadelphia Semiconductor Index constituent saw its shares shed more than 20% across two sessions after its revenue guidance for the coming quarter fell short of the market's most optimistic projections. The drop weighed on the broader tech sector, pulling memory chipmaker Micron down by a similar magnitude.
A second pressure point emerged from a different direction entirely. Elon Musk's SpaceX is reported to be pursuing a public listing at $135 per share, implying a market capitalization of roughly $1.75 trillion — a valuation that would place it among the eight largest U.S.-listed companies. Institutional investors appear to have trimmed existing positions to fund allocations into SpaceX shares, generating a capital displacement effect that compounded the tech sector pullback.
The combined pressure brought Taiwan's major indices back toward their quarterly and annual moving averages. Analysts identify the 38,000 and 40,000-point levels on Taiwan's weighted index as significant technical floors with strong support.
Fundamentals Unchanged; TSMC Chairman Says Stay the Course
Despite the surface-level turbulence, analysts stress that the underlying earnings picture has not materially shifted. AI-driven semiconductor demand continues to run strong, and C.C. Wei (魏哲家), chairman of Taiwan Semiconductor Manufacturing Co. — the world's largest contract chipmaker — recently reaffirmed that business conditions remain robust, with forward visibility extending three years out and capacity expansion continuing to accelerate. He reiterated second-quarter guidance unchanged and repeated his earlier message directly: long-term investors should stay in their positions.
Goldman Sachs Sets New Record Taiwan Target of 51,000
Wall Street has responded to the AI demand trajectory by steadily revising its targets for Asian equity markets higher. Goldman Sachs on June 3 lifted its 12-month target for South Korean stocks from 9,000 to 12,000 points, citing North Asia's technology sector as delivering the strongest earnings growth in the region and raising its 2026 earnings growth forecast for the sector to 320%.
For Taiwan, the numbers are even more striking. JPMorgan Chase raised its bull-case target to 50,000 points in May, and Goldman Sachs followed on June 3 by lifting its base-case target from 45,000 to 51,000 — a new record among institutional forecasts. The upgrade rests on a 35% earnings growth estimate, fueled by the full-scale delivery of AI chip capacity, including TSMC's CoWoS packaging, built out over the past two years.
Even as the earnings base rises into 2027, foreign brokerages are broadly maintaining double-digit growth forecasts of 15% to 20%, citing the ramp-up of next-generation, higher-margin AI chips and the accelerating adoption of AI across non-technology industries.
CoWoS Ramps to Full Capacity, Broadening the Earnings Upgrade Cycle
As the cost of deploying AI falls, its economic benefits are no longer concentrated at a handful of companies. Power infrastructure providers — including heavy electrical equipment makers and battery backup unit manufacturers — industrial automation firms, and financial institutions investing heavily in AI-driven operations management are all expected to receive earnings upgrades over the next two years. The mechanism is efficiency gains and order spillover effects as the sectoral rotation broadens beyond core semiconductor names.
SOX Near Double for the Year; Correction Seen as Technical, Not Fundamental
The wider context is a U.S. semiconductor index that had run extraordinarily hard before this week's pullback. The SOX reached an all-time intraday high of 13,998 points, accumulating a gain of 97.6% for the year — dwarfing the Nasdaq's 15.54%, the S&P 500's 11.32%, and the Dow's 5.46%. Memory chipmakers led the advance, with Micron, Western Digital, Seagate, and Sandisk all posting gains measured in multiples. Semiconductor equipment makers — Applied Materials, KLA, Lam Research, and ASML — also delivered strong performances. Among CPU designers, Intel, AMD, and Arm Holdings recorded year-to-date gains of 218%, 156%, and 301% respectively, closely tracking the memory group. Micron's market capitalization has surpassed $1.05 trillion.
With the index nearly doubling in under six months, the bar for individual stock performance has risen accordingly. Both Broadcom and Micron reported solid results — the issue was that next-quarter revenue guidance merely fell short of peak-optimism projections. The sell-off, in that reading, reflects elevated positioning rather than any deterioration in business fundamentals. The underlying outlook, analysts say, remains constructive.
*Adapted from Wealth Invest Weekly, Issue 2408. By Fang Ya-shen. （Related： Jensen Huang Points to Optical. Taiwan's BE Epitaxy Is Already There. ｜ Latest ）
