Stock Market Pyramid Fluctuations: Rational Reassessment of the AI Sector, Who Is the Next Buying Opportunity?

Market Turmoil

Taiwan stocks experienced a volatile session today, dragged down by the poor performance of US Tech Stocks on Friday. The market opened with a gap down, plunging by 514 points at one point, with the intraday low reaching 27,684, breaking below the 28,000 psychological level. This correction shattered the market’s expectation of a continued rally and prompted investors to reassess the valuation logic at the top of the stock market pyramid.

Taiwan Semiconductor Manufacturing Company (TSMC) ADR fell 4.2 last night, with the stock opening sharply down by 30 to 1,450, breaking the moving average line; the stock king, Wistron NeWeb, fluctuated around 6,600, with early trading dipping to 6,590 before finding support. The performance of these heavyweight stocks directly reflects market anxiety over re-pricing high-priced stocks.

Signals of Capital Reallocation

From the flow of funds on the market, today’s movement is not a complete exit of capital but a precise industry rotation. Oil, electricity, and electrical stocks rose 3.09% against the trend, while networking and shipping stocks increased by 1.33% and 1.25%, respectively, indicating that capital is seeking targets with clear cash flow and valuations that have not been excessively inflated.

In contrast, glass stocks fell 2.59%, other electronics stocks declined 2.15%, and semiconductor stocks dropped 1.8%, highlighting the adjustment pressure in the midstream of the electronics supply chain. This divergence is not sudden but reflects the market’s reconsideration of the stock market pyramid structure—simple concept speculation is no longer sustainable, and profitability and valuation matching have become new screening criteria.

Stock Performance Divergence Intensifies

Amid the market pressure, some companies are bucking the trend and rising against the wind. Precision testing stocks surged 8%, hitting a new high of 2,370, benefiting from demand for next-generation smartphones and high-end tablets. Their cumulative revenue for the first 11 months reached NT$4.415 billion, up nearly 40% year-over-year, maintaining a solid double-digit growth expectation for the full year.

The stock king, Wistron NeWeb, revised its quarterly outlook upward twice due to smooth supply chains and better-than-expected shipments, extending order visibility into Q2 2025. This is seen as a bullish/bearish indicator for high-priced stocks. The performance of such stocks suggests that even if the broader market adjusts, companies with real growth momentum can still stand out.

The Truth About AI Orders

The core of this correction is not the disappearance of AI demand but a change in market game rules. Broadcom’s earnings report revealed that AI orders over the next 18 months have reached US$73 billion, with demand remaining strong; Oracle holds US$523 billion in orders, of which US$300 billion come from OpenAI. However, Wall Street analysts are beginning to ask a critical question: can these orders truly translate into profits?

Broadcom’s stock plummeted 11.43% after earnings, reflecting the market’s awakening to “orders ≠ profits.” The company is shifting from “selling high-margin chips” to “selling system solutions,” which means future profitability and return cycles face uncertainty. Stocks deeply tied to OpenAI—Oracle, SoftBank, Microsoft, NVIDIA—have collectively weakened since late October, exposing customer concentration risks.

In contrast, Google possesses assets most lacking in OpenAI: stable cash flow and a complete industry chain. Google’s expected capital expenditure in 2026 is only 56% of operating cash flow, leading among giants in efficiency; TPUv7’s total cost of ownership is about 44% lower than NVIDIA’s GB200 servers, with clear vertical integration advantages.

Year-End Triple Risks

Taiwan stocks are facing three major year-end challenges, which together increase market uncertainty. US stock volatility directly influences foreign investment allocations in Taiwan stocks; the new IFRS 17 regulations for life insurers next year will force companies to reassess their holdings, potentially triggering passive selling pressure; and this week’s “Super Central Bank Week,” with expectations of Japanese rate hikes, adds further variables.

These factors, combined with the revaluation of the stock market pyramid structure, put dual pressure on high-priced stocks. However, it’s worth noting that this correction reflects a maturing market process rather than a bubble burst.

Divergence Becomes the New Normal

Looking ahead, sector differentiation within AI will become mainstream. Companies relying solely on “concept hype,” with fragile customer structures and lacking substantial profitability, will face ongoing valuation pressure during rational screening; meanwhile, firms with core technological strength, solid profit bases, diversified customers, and clear growth paths will gain new valuation logic amid market adjustments.

The subsequent performance of heavyweight stocks like TSMC, Precision Testing, and Wistron NeWeb will serve as important references for judging market bottoms and entry points. When the top of the stock market pyramid completes its valuation restructuring, the foundation for the next upward cycle will truly be solidified.