The Taiwanese stock market has emerged as a notable leader in global financial performance, particularly as evidenced by the impressive 28.47% increase in the weighted index throughout 2024. This surge has captured the attention of investors worldwide, yet it has also prompted a shift towards a more cautious mindset among market participants. According to Bai Fangping, a fund manager at Fidelity International, the outlook for 2025 suggests that Taiwan's stock market is poised to maintain a volatile yet upward trajectory. As new products and applications continue to roll out, demand in the artificial intelligence (AI) sector is anticipated to play a fundamental role in bolstering market performance. Bai encourages investors to seize opportunities in the “serpentine-shaped rise” of investments, continuously seeking upward momentum amid the market fluctuations.

Bai underscores that the evolution of AI technology is likely to remain a critical driving force for the Taiwanese stock market, particularly in industries such as semiconductors, AI computing, and robotics. This momentum is especially pronounced with the increasing demand for advanced packaging technology and high-speed data transmission, paving the way for valuable investment opportunities linked to related supply chains.

As AI technologies advance, the trend towards high-precision chip packaging is becoming increasingly relevant. For instance, to meet the requirements for data computation and high-speed transmission, Common Photonic Packaging (CPO) technology is rapidly gaining traction. The rise of AI presents commercial opportunities which render high-speed transmission technologies vital for the semiconductor industry's development.

Additionally, cloud service providers are actively expanding their proprietary chip development to better align with business needs while diminishing reliance on conventional graphics processing units (GPUs). A forecast from Broadcom reveals that the AI Application-Specific Integrated Circuit (ASIC) service market is expected to surge from $12.2 billion in 2024 to between $60 billion and $90 billion by 2027, indicating a substantial commercial opportunity that could further stimulate the Taiwanese stock market and its supply chains.

Moreover, the expansion of edge AI applications, such as smart phones, laptops, autonomous driving capabilities, and intelligent manufacturing, is projected to play a pivotal role in realizing profit from AI commercialization. Major tech companies like Tesla and NVIDIA foresee robotics as a significant area for growth, recognizing the vast opportunities facilitated by the digital and automated economies. A report from Trend Force projects a compound annual growth rate (CAGR) of 154% for the robotics sector between 2024 and 2027. Furthermore, with the launch of new products and applications, the AI computer market is expected to witness increased segmentation, enticing consumers to upgrade their devices, particularly in light of recent trends accelerated by the COVID-19 pandemic and the cessation of Windows 10 support. Anticipation around the penetration rate and shipment volumes of AI computers is expected to rise, thereby further whetting the appetite for related companies to capitalize on this momentum.

Within the semiconductor realm, the shift towards advanced processes and packaging technology is apparent. Demand for 3-nanometer nodes remains strong, while 2-nanometer production is set to commence in the latter half of this year. Additionally, the N2P 2-nanometer process and the A16 process are also slated for mass production by the second half of 2026. TSMC continues to lead the semiconductor development landscape, presenting significant investment opportunities across various components and equipment sectors.

In light of recent developments from startups in mainland China, such as DeepSeek, which launched a low-cost, high-efficiency AI model, the market is beginning to reevaluate its capital spending strategies regarding AI technologies. In the short term, market volatility is likely to persist; however, the trend towards affordable AI solutions is expected to increase participation from smaller businesses and individual users, ultimately accelerating AI penetration and boosting overall product demand and market size.

Specifically, companies specializing in edge AI solutions may stand to benefit significantly. With heightened concerns surrounding information security, businesses are becoming increasingly inclined to utilize on-premise AI models, which, in turn, could fuel an upgrade wave across the entire edge AI hardware sector. Additionally, AI software developers are set to experience growth opportunities as AI becomes more mainstream, leading to a more diverse and increased demand for AI applications.