Can a company be worth more than twice the economic output of the country in which it is based? The Taiwan Semiconductor Manufacturing Company (TSMC) proves that it can.
With a market capitalisation of more than $2 trillion, the world’s largest contract chipmaker has become indispensable to the global AI boom, serving as a key supplier to Nvidia, the world’s most valuable company!
Investor enthusiasm for AI-related stocks has propelled TSMC to become the world’s sixth-most-valuable company. In fact, the chipmaker is now worth more than Saudi Aramco, Meta Platforms, Berkshire Hathaway, and Walmart. South Korea’s Samsung Electronics and SK Hynix, along with Japan’s SoftBank, are among the other companies whose share prices have surged in recent months amid the AI boom.
MARKET CAP MORE THAN TAIWAN’S GDP
According to a Reuters report, “Expectations of runaway growth in profits have led to TSMC occupying 41.5 per cent of Taiwan’s TAIEX and Samsung and Hynix comprising 55 per cent of South Korea’s KOSPI, meaning these indexes are largely bets on one or two stocks.”
The performance of US stock markets has followed a similar pattern, with a disproportionate share of investment flowing into AI-related stocks. The “magnificent seven” — Apple, Microsoft, Nvidia, Amazon, Meta, Alphabet, and Tesla — now account for more than a third of the S&P 500 Index and have been responsible for the bulk of its gains in 2026.
Data compiled by CompaniesMarketCap shows that of the 14 companies worldwide with a market capitalisation exceeding $1 trillion, only four have no direct exposure to the AI theme. The ranks of trillion-dollar companies have expanded to include Broadcom and Micron Technology, reflecting the growing influence of the AI theme on equity valuations. Both Broadcom and Micron Technology are deeply embedded in the AI ecosystem and have seen their market values surge accordingly.
The market’s overwhelming focus on the AI theme has been one of the factors behind the underperformance of Indian equities, which have also been weighed down by relentless selling from foreign portfolio investors. While South Korea’s KOSPI and Taiwan’s TAIEX have delivered returns of more than 40 per cent in the first five months of 2026, India’s NIFTY has remained in negative territory so far this year.
CAUTIOUS NOTES FROM FINANCIAL EXPERTS
Amid growing concentration risks in AI-related stocks, several prominent figures in global finance have sounded a note of caution. Jamie Dimon, chairman and chief executive of JPMorgan Chase, is reported to have said that there’s a lot of “exuberance out there”. He added that similar exuberance was evident in 1972, 1986, 2000, and 2007. The year 2000 is synonymous with the dot-com bubble, while the excesses of 2007 were followed by the global financial crisis a year later.
Similar concerns have been voiced by Ray Dalio, founder of Bridgewater Associates. He has argued that every major technological transformation creates a bubble of some kind.
Will the AI trade follow the familiar boom-and-bust cycle? Or will it prove to be an exception to the rule? Only time will tell.
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