TAIPEI (TVBS News) — Taiwan's benchmark stock index fell 376.87 points on Thursday (April 30) to close at 38,926.63 points, breaking below the 39,000 level. The dramatic 922-point intraday swing validated analyst warnings about overheating in a market that crossed the historic 40,000 threshold just three days earlier.
Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), which accounts for roughly one-third of the index's weighting, closed at NT$2,135 (around US$67.50), down NT$45, or 2.06%. The chipmaker was hit by what analysts described as a "short attack" in the final minutes of trading, when approximately 18,000 lots — equivalent to 18 million shares — pushed the stock down sharply.
The selloff came despite the U.S. Federal Reserve holding interest rates steady on Wednesday and the Philadelphia Semiconductor Index rising 2.35%. Taiwan's market had gained 7,203 points, or 22.7%, in April alone before Thursday's reversal. Trading volume reached NT$1.02 trillion (around US$32.25 billion).
Analysts had warned that three technical indicators pointed to an overheated market. The annual deviation rate — measuring how far prices have stretched above their long-term average — exceeded 46%, a level that has historically preceded significant corrections over the past decade, according to analyst Chan Hsuan-yi (詹璇依).
Yet the paradox facing investors is that Taiwan's flagship company may still be undervalued. Senior analyst Tsai Ming-han (蔡明翰) projected TSMC's earnings per share could grow from NT$100 (around US$3.16) this year to NT$120 (around US$3.79) next year. He estimated it could reach NT$160 (around US$5.06) the year after, based on a 25-times price-to-earnings ratio.
Those projections would translate to price targets of NT$2,500 (around US$79.04) for 2026, NT$3,000 (around US$94.85) for 2027 and NT$4,000 (around US$126.46) for 2028, Tsai said. TSMC has not publicly confirmed these earnings estimates, which remain analyst projections rather than official company guidance.
U.S. financial media outlet Insider Monkey reported that billionaire investors view TSMC as one of the most attractive fundamental stocks, citing its dominant position in AI chip manufacturing for clients including Nvidia (輝達) and Apple (蘋果). The outlet noted that despite breaking market capitalization milestones, TSMC's stock "still looks very cheap."
The company is expanding its advanced packaging capabilities, with plans to establish a chip packaging facility in Arizona by 2029, according to Reuters. TSMC maintains strong profit margins despite massive capital expenditure on new facilities, a rarity that analysts say reflects its early success capturing AI-driven demand.
The contradictory signals—technical overheating versus fundamental undervaluation—have split analyst opinion on how to proceed. Tsai argued that traditional technical indicators like high margin financing and deviation rates "no longer apply to judging long-term trends" since AI's emergence in 2023, typically affecting only short-term market sentiment and volatility.
Foreign investors have maintained net buying for three consecutive weeks, purchasing more than NT$117.26 billion (around US$3.71 billion) in the most recent week alone, according to Yushan Investment Trust (玉山投信). Wang Wei-che (王偉哲), a fund manager at the firm, said Taiwan has become "one of the world's strongest markets," driven by AI-related technology stocks.
For long-term investors holding funds and ETFs through regular contributions, Chan advised maintaining discipline and staying in the market without taking special profit. However, she cautioned against adding positions at current highs, recommending instead that investors preserve cash rather than "blindly adding at high points."
Capital Securities Investment Consulting (群益投顧) said the pullback after April's strong gains was "a normal phenomenon," advising investors to carefully select stocks with strong operational outlooks and lower price bases. The firm recommended a "stock-picking over market-timing" approach with cautious, flexible operations as the market enters May.
The market faces a critical test in mid-May, when first-quarter earnings reports and April revenue figures will reveal whether corporate profits have kept pace with stock price gains. Middle East tensions and elevated oil prices continue to cloud the inflation outlook, potentially delaying U.S. Federal Reserve rate cuts and keeping foreign investors cautious.
Both narratives — overheating and undervaluation — remain simultaneously valid, leaving investors to decide which timeframe they are operating in. Bulls and bears alike have defensible arguments, and the market's direction may ultimately depend on whether TSMC's fundamentals can outpace the technical warning signs flashing across Taiwan's trading screens. ◼ (At time of reporting, US$1 equals approximately NT$31.63)