(Feb 15): Taiwan’s stock benchmark surged to its highest level on record, as expectations of booming demand for artificial intelligence (AI) technology drove investor sentiment.

The Taiex climbed 3%, surpassing a January 2022 peak, as the market reopened after more than a week of Lunar New Year holiday. The bulk of the gain came from a 7.9% jump in Taiwan Semiconductor Manufacturing Co (TSMC), the island’s largest stock and the key provider of foundry services for Nvidia Corp.

The new peak came as investors continued to pile into the AI theme, driving up shares in chipmakers and other tech firms globally. The Philadelphia Stock Exchange Semiconductor Index climbed to a new high recently, while Nvidia’s market capitalisation has soared to around US$1.82 trillion (RM8.70 trillion), surpassing Amazon.com Inc and Alphabet Inc.

TSMC, which has a weighting of around 30% in the Taiex, reported during the holiday that its January sales rose 7.9% from a year ago. Executives of the company met with Nvidia chief executive officer Jensen Huang last month to discuss AI chip supply constraints, a major challenge to the AI boom.

“Taiwan’s been driven by tech, especially the AI theme,” said Xin-Yao Ng, an investment director for Asian equities at abrdn. “Nvidia has been a catalyst adding on to the sentiment, after Jensen Huang visited Taiwan, boosting investors appetite for AI value chain plays and Nvidia suppliers.”

The lure of further gains in TSMC and other tech stocks has brought an inflow of cash from international investors. Foreign funds have bought nearly US$14 billion worth of Taiwanese equities on a net basis since the end of October, data compiled by Bloomberg showed.