SemiAnalysis Forecasts NVIDIA Data Center Compute Revenue 20% Above Consensus for H2 FY2027

Taiwan's stock market is emerging as a more compelling choice than South Korea's for investors looking to ride the artificial intelligence wave in the final stretch of 2026, after growth in the AI industry began spreading from chipmakers to other businesses across the supply chain. Taiwan's Taiex index has jumped roughly 72% since the start of 2026, the highest among more than 90 global equity indexes tracked by Bloomberg, while South Korea's KOSPI has gained about 63%, ranking second. In the third quarter, the Taiex outperformed the KOSPI by about 23 percentage points, the widest gap since the early 2000s, and earnings estimate upgrades for Taiwanese listed companies outpaced South Korea's for the first time since March 2025. Earnings estimates for companies in the Taiex were revised up by about 19% in the quarter ending in September, compared with an increase of about 15% for KOSPI companies. A Bank of America fund manager survey in September found that about 40% of respondents said they were overweight Taiwanese stocks relative to the benchmark, compared with 25% who held the same view on South Korean stocks. In the survey of 87 fund managers overseeing a combined 211 billion dollars in assets, 35% said Taiwan would be the Asian stock market to benefit most from AI going forward, while only 5% chose South Korea. A key factor is Taiwan's industrial structure, which is linked to the AI supply chain at many levels, from semiconductor design and manufacturing to chip packaging, networking systems and servers. South Korea's market, by contrast, still relies on just a few large chipmakers, particularly Samsung Electronics and SK Hynix, which fell between 19% and 33% in the three months ending in September after six straight quarters of gains. Societe Generale continues to favour Taiwanese stocks over South Korean ones, expecting the rise in memory chip prices to slow over the coming quarters before returning to normal in 2028 amid growing competition from Chinese producers. However, Peter Lee, a managing director at Citigroup, believes investors should start accumulating shares such as Samsung and SK Hynix, because the market may be underestimating demand for high-bandwidth memory chips, or HBM, in 2027. On valuations, Taiwan's market trades at about 18 times forward 12-month earnings estimates, above the KOSPI's roughly 5.5 times. And Taiwan's rally is not confined to Taiwan Semiconductor Manufacturing Co. alone. TSMC shares rose 2.9% in the quarter ending in September, their sixth straight quarterly gain, while about 10% of stocks in the Taiex have at least doubled since the start of the year, compared with just 4.1% of KOSPI stocks and 5.7% of stocks in Japan's Nikkei 225.

Analysts expect Samsung Electronics to post operating profit for the third quarter of 2026 that is nearly 9 times higher than a year earlier, driven by strong demand for AI chips. A survey of analyst estimates compiled by LSEG SmartEstimate indicates that Samsung, the world's largest memory chip maker, will report operating profit of 106.1 trillion won, or about 79.1 billion US dollars, in the third quarter of July to September, even as memory chip price increases begin to slow and the won strengthens. If the forecast is borne out, the figure will rise from 12.17 trillion won in the same period last year and will mark a fourth consecutive quarter in which Samsung posts a record-high operating profit, underscoring the prolonged memory chip shortage caused by demand for AI infrastructure growing faster than supply. However, slowing chip price increases in the third quarter have raised concerns that margins in Samsung's chip business may have already peaked, and have brought questions about the sustainability of the spending surge in AI technology. The slowdown in memory chip prices is being watched closely by investors after prices soared for more than a year on the back of AI demand, which allowed the world's major chip makers Samsung, SK Hynix and Micron to all post record profits and margins. Samsung will release preliminary third-quarter results tomorrow, October 8, before disclosing detailed figures later this month.