Taiwan Equity Strategy Staying with the momentum in the most pure-play exposure to AI buildout

研报英文原文证据摘录

Taiwan Equity Strategy Staying with the momentum in the most pure-play exposure to AI buildout

Securities (Asia Pacific) Limited/ J.P.

Morgan Broking (Hong Kong) Limited

leverage, wealth effect spillovers and assessments of energy security.

• Embracing the AI momentum: Incoming evidence over the past 2-3 months

that mitigates the monetization challenges in AI (step-gains in model

capabilities, accelerating agentic token consumption, easing token pricing

deflation, and new funding secured), and cascading hardware pricing increases

(which JPM Tech analysts believe will continue) have materially raised the

future growth trajectory for AI capex and for upstream hardware revenues.

Separately, notwithstanding any negotiated settlement of the Middle East

conflict, commodity prices will likely remain above pre-war levels, financial

conditions tighter and overall demand weaker (“stagflation”). Following these

developments, we have regionally recommended to ride the upside in AI

(embracing the inherent concentration risks). Taiwan’s Tech sector (where

almost every stock has some degree of AI exposure) is 88% of MSCI Taiwan

and 80% of the TWSE index.

• Investor positioning still light: Across meetings in the US, HK and Singapore

over the past three weeks, we found investors on aggregate to be cautiously

optimistic but less-than-fully positioned in the market. In addition, for TSMC,

there are mandate constraints for LO investors and its lower beta makes it an

attractive funding position for HFs in periods of rapid upside. As such,

positioning on aggregate in the market appears surprisingly low. EM LO

investors’ UW positions in Taiwan are now some of the largest in 10 yrs. And

L/S exposure in Taiwan semis for HFs in the JPM Prime book is below the 10th