Recent volatility in global AI and semiconductor stocks has reignited market discussions about whether AI is facing a bubble risk. Hsien-Ming Lien, President of the Chung-Hua Institution for Economic Research (CIER), stated that it is still too early to talk about an AI bubble bursting. The key to determining if a bubble has formed lies in whether the market experiences a situation where “supply vastly exceeds demand.” Currently, global AI infrastructure construction continues to expand, and the supply of computing power has not yet surpassed market demand, meaning the AI industry’s long-term growth momentum remains intact.
AI Infrastructure Demand Remains Strong—No Signs of Oversupply at Present
Lien pointed out that market concerns over a bubble are primarily related to the substantial short-term gains in AI-related stocks. Moreover, Taiwan is situated at the center of the global AI supply chain, a shift from previous industry waves such as the internet, smartphones, e-commerce, and electric vehicles, which makes the stock market’s reaction even more significant.
From an industry perspective, Taiwan’s importance in the global AI ecosystem continues to rise. Related research indicates that AI has gradually evolved from a technological arms race among large tech companies into a crucial component of global digital infrastructure, driving sustained demand growth across the semiconductor supply chain. Taiwan occupies a pivotal position in the development of the global AI industry and is generating new momentum for economic growth by leveraging its advantages in semiconductor manufacturing, chip design, and the AI server supply chain.
However, the market still needs to monitor the financial risks accompanying the rapid development of the AI industry. In recent years, U.S. AI infrastructure has heavily utilized private credit and off-balance-sheet financing models. If liquidity in global financial markets tightens, it could affect related investment plans. Nevertheless, Lien points out that most Taiwanese AI companies maintain robust operations and strong profitability. This financial health limits their reliance on private credit, ultimately exposing them to lower risks than companies in the U.S.
Financial Leverage Risks Warrant Closer Attention—Rational Investing Can Prevent Magnified Market Volatility
By comparison, what Taiwan should pay closer attention to is the excessive use of financial leverage by investors. Recently, some investors have poured money into the stock market through multiple borrowing methods, including mortgages, personal loans, auto loans, and stock pledges. Should market volatility intensify or the interest rate environment change, it will elevate risks to both personal finances and the broader financial system.
Lien stated that AI industry development and capital market performance should be viewed separately. Corporate fundamentals remain the key to sustaining long-term industry growth, but investors should still carefully assess market risks and avoid over-leveraging. Looking ahead, the government must not only continue to promote AI industry development but also balance financial stability. By strengthening risk management and investor education, the government can ensure that the industrial upgrading and economic growth driven by AI are built on a robust and sustainable foundation.
Source: Economic Daily News (July 21, 2026). AI Stock Mania in Taiwan: The Real Risk Is Multi-Loan Overleveraging, Not Private Credit. Economic Daily News. https://money.udn.com/money/story/124480/9639395