The truth behind the Taiwan stock market opening high and then falling: AI industry segmentation officially begins. Who is the real winner?

Market Trend Diagnosis: Signals of Opening High and Moving Low Emerge

Taiwan stocks today showcased a classic opening high and subsequent decline pattern, opening at 28,119 points and quickly falling into a deep correction. The intraday low reached 27,684 points, a single-day drop of 514 points, nearly 1.9%. The appearance of this opening high and low signal is not a sign of market panic; rather, it indicates that funds are undergoing more refined filtering.

The stock king, 信驊 (Xinhwa), experienced intense battles around the 6600 yuan mark, with an early dip to 6,590 yuan followed by quick support. This repeated pattern of opening high and moving low essentially reflects a genuine shift in market sentiment—investors are no longer blindly chasing gains but are seeking more certain value support.

TSMC opened with a gap down of 30 yuan to 1,450 yuan, with ADRs plummeting 4.2% last night, breaking below a key moving average support. Leading stocks like MediaTek and Hon Hai all declined, with electronics stocks down 1.8% becoming the hardest hit. However, it is worth noting that although high-priced stocks generally closed lower, there was no panic selling across the board.

Industry Logic Shift: From Concept Premium to Profit Quality

The fundamental logic behind this pattern of opening high and moving low is not due to a sudden shrinkage in AI demand but a rational re-pricing of valuation. Over the past two years, AI concepts have been like a universal key—any connection to AI could garner huge valuation premiums. But when Broadcom announced a $73 billion order and its stock price plunged, the market’s rules of the game had already changed.

Broadcom’s post-earnings drop of 11.43% did not trigger quick bottom-fishing; instead, it signaled that funds are re-evaluating the value of “orders.” The company openly shifted its transformation focus from “selling high-margin chips” to “selling systems,” which appears as a business upgrade but actually hints at margin pressures.

Among Oracle’s $523 billion in orders, $300 billion come from OpenAI, but the market is beginning to question the profitability certainty of these orders. The new co-CEO tried to dispel market doubts, claiming the company has over 700 AI clients, and even if OpenAI defaults, infrastructure can be reallocated “within hours.” This statement exposes the risk that OpenAI might not be able to handle the order volume—if it were truly stable, why emphasize the ability to pivot quickly?

Companies deeply tied to OpenAI include Oracle, SoftBank, Microsoft, and NVIDIA. Their stock prices have collectively declined sharply since late October, serving as the most direct market vote on order stability.

Winner Differentiation: Who Has a Genuine Moat

After the signals of opening high and moving low, the market has begun to undergo deeper industry differentiation. True strong players are emerging.

The counter-trend rise of 精測 (Jingce) provides important reference. Its stock surged over 8% to 2,370 yuan, setting a new high. Benefiting from the inventory buildup momentum for next-generation smartphones and high-end tablets, its consolidated revenue for the first 11 months reached 4.415 billion yuan, up nearly 40% year-over-year. The market is optimistic about maintaining double-digit growth for the full year. Jingce’s ability to rise amid the opening high and low environment hinges on its orders coming from diverse end applications rather than reliance on a single customer.

信驊 (Xinhwa) also warrants attention. Benefiting from smooth supply chains, its shipment performance exceeded expectations, leading to a second upward revision of this quarter’s outlook and optimism for 2025 as the peak year, with order visibility extending into Q2 next year. After dropping to 6,590 yuan early in the session, it quickly turned positive again—this is the reversal opportunity after the opening high and low. The market uses the decline to shake out weak hands, and the company’s fundamental advantages become apparent.

Google demonstrates the strongest competitiveness. The company possesses what OpenAI lacks most: cash flow and a complete vertically integrated industry chain. By 2026, capital expenditure is expected to account for 56% of operating cash flow, making it the most efficient among giants. Even more impressive, Google’s TPUv7’s total cost of ownership (TCO) is about 44% lower than NVIDIA’s G200 servers. This extreme cost advantage is unmatched by any company solely making chips or systems.

Capital Flows: From Overhyped Concepts to Substantial Assets

During the opening high and low, capital did not fully withdraw from the market but completed a clever rotation. Oil, electricity, and electrical equipment stocks rose 3.09%, becoming the biggest winners, followed by communication and shipping stocks, up 1.33% and 1.25%, respectively. The flow of funds reflects investors seeking assets with clear cash flows, valuations not yet excessively inflated, and insensitivity to interest rate environments.

Semiconductor stocks declined 1.8%, other electronics stocks fell 2.15%, and glass stocks dropped 2.59%. The capital withdrawal precisely targeted midstream supporting sectors relying solely on “AI concepts.” This is not a negation of the AI industry but a search for more certain value anchors amid industry chain differentiation.

Year-End Test Under Triple Pressures

The signals of opening high and moving low are also closely related to the three major year-end tests. Last Friday’s sharp decline in US stocks directly transmitted to Taiwan stocks, prompting immediate reduction in foreign capital allocations. The IFRS 17 regulation change in the life insurance industry is also brewing selling pressure—after the system switch, if stocks are classified as FVOCI, even large gains from sales can only be recorded as capital reserves, preventing EPS from being beautified. This forces life insurers to accelerate realization of accumulated unrealized gains before the system switch.

This week’s “Super Central Bank Week” includes the expectation of a 25 basis point rate hike by the Bank of Japan, which could lead to the exit of interest rate spreads trading, further increasing market volatility. These factors together form a comprehensive explanation framework for the opening high and moving low.

Outlook: Bubble Burst or Maturity Prelude

This correction in the AI sector is not a bubble burst but an inevitable step toward market maturity. The appearance of the opening high and low signals precisely marks the beginning of rational filtering in the market.

In the future, sector differentiation within AI will become the norm. Companies relying solely on “AI concepts,” with single customer structures and lacking profitability support, will face ongoing valuation compression. Conversely, companies with core technologies, stable profitability, diversified customer bases, and clear growth paths will stand out through market rational filtering.

The core investment principle is: after the opening high and moving low, distinguish whether the decline is driven by panic selling or rational pricing. Companies like 精測 (Jingce), 信驊 (Xinhwa), and Google can maintain or seize opportunities during adjustments because they possess what the market ultimately values—real cash flow, diverse customer bases, and a clear growth trajectory. The opening high and low is not the end but the starting point for finding true winners.