Nomura Investment Trust: Outlook for Taiwan Stocks in the Second Half of 2026 - AI-Driven Fundamentals Remain Strong, Watch for Inflation and Geopolitical Variables

Nomura Investment Trust points out that the global market in the second half of 2026 will still be affected by geopolitical factors and inflation, making volatility inevitable. However, with upward revisions in corporate earnings and strong demand for technology, the medium- to long-term fundamentals of Taiwan stocks are expected to remain positive, with the AI supply chain continuing to be the core growth axis.

Yao Yu-Ru, the head of the domestic equity investment department at Nomura Investment Trust, states that the conflict between the US and Iran affects inflation and monetary policy through oil prices. The Federal Reserve is expected to maintain a cautious tightening stance and may raise interest rates, but the market has gradually digested the risk and is expected to return to fundamentals. Regarding the Taiwanese economy, the GDP growth rate for 2026 has been revised upwards to approximately 9.6%, demonstrating growth potential even in a non-low base period. Foreign exchange orders are stable, and demand for electronics and telecommunications is strong, continuing the momentum of exports. With moderate inflation and stable interest rates, this is favorable for the development of enterprises and the capital market. Corporate earnings growth is expected to be revised upwards by more than 40%, becoming an important support for Taiwan stocks. The investment strategy recommends focusing on companies with high entry barriers and upgrade capabilities, and taking advantage of low points to build positions.

Yao Yu-Ru further points out that from an industry perspective, AI is leading the way. The demand for AI servers and high-performance computing continues to expand, and cloud service providers are increasing their capital expenditures, driving the overall growth of the Taiwanese supply chain and extending to key components. Technologically, cooling is shifting from air cooling to liquid cooling, improving efficiency and reducing energy consumption. Power supplies and MLCCs are growing in sync with the demand for high voltage and new architectures. AI server power supplies are developing towards 800V high voltage, with introduction in 2026 and penetration rate improvement in 2027, boosting the value of the supply chain. PCB and CCL are developing towards high-end materials and high speed, with ASIC becoming one of the main drivers. Although memory is driven by HBM demand, whether it can form long-term structural growth remains to be seen.

For non-tech industries, structural opportunities come from AI driving power demand, boosting heavy electricity and infrastructure. The 2026 World Cup will drive consumption and brand demand, and the inventory replenishment effect will give growth potential to sectors such as apparel and footwear that are in a low base period.

Yao Yu-Ru points out that the key points to watch in the second half of 2026 are: first, the impact of geopolitical factors and oil price fluctuations on inflation and monetary policy; second, changes in the Federal Reserve's interest rate policy and global capital flows; and third, whether AI capital expenditures will continue to maintain strong momentum, especially the investment plans of cloud service providers and the order situation of the industrial supply chain.

Therefore, it is recommended to focus on industries with long-term upward trends. For tech stocks, the core areas are semiconductors, AI, high-speed computing, and key components (such as cooling, power supplies, capacitors, and PCB). For non-tech industries, it is recommended to focus on low-base and low-inventory sectors. Although short-term volatility remains, with the support of industrial upgrading and earnings growth, Taiwan stocks still have long-term upward potential. It is recommended that investors seize the growth axis of the industry and, in the midst of volatility, build positions in targets with competitive advantages and growth certainty.

The economic trend predictions mentioned in this article do not necessarily represent the performance of the fund. Please refer to the fund's prospectus for fund investment risks.

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