At the start of 2026, Asian tech stocks far outperformed the US Nasdaq.

2026 has begun with strong performance from Asian technology stocks, with gains significantly surpassing their U.S. counterparts. Global investors are betting that the region’s central role in the semiconductor supply chain and its highly attractive valuations will drive this outperformance throughout the year. According to Bloomberg data, as investors rotate from the highly valued U.S. market to Asian markets, key Asian tech stock indices have risen about 6% so far this year, far outperforming the Nasdaq 100’s 2% gain. This shift in capital flows reflects growing skepticism over whether U.S. tech stocks can maintain their AI-driven rally after several years of sharp increases. Solid fundamentals are bolstering the trend. Last week, Samsung reported preliminary operating profit more than tripling to a record high, while TSMC’s revenue exceeded expectations. Additionally, Chinese AI companies made impressive IPO debuts, further boosting market optimism. Major financial institutions hold a positive outlook on Asian markets. Goldman Sachs strategists currently maintain an overweight rating on the sector, saying that surging AI-related demand and reasonable valuations will drive prices higher. Citigroup also notes that, given Asian tech stocks’ key position in the semiconductor supply chain and their earnings upside potential, global long-term investors are steadily increasing their holdings. **Valuation Gaps Fuel Capital Flow** Current market trends are mainly driven by shifts in investor risk and reward preferences. Dilin Wu, research strategist at Pepperstone Group Ltd., said U.S. tech stocks are like a ‘mature gold mine,’ with high valuations; Asian tech stocks, by contrast, resemble an ‘under-explored mine,’ undervalued but with strong fundamentals, ready to reward investors who pay attention. Valuation data supports this view. The MSCI Asia Pacific Information Technology Index currently trades at a forward price-to-earnings ratio of 16.3, while the Nasdaq 100 and Philadelphia Semiconductor Index trade at around 25. Even though the Asian tech index has outperformed Nasdaq by 33 percentage points since the end of 2024, this valuation gap remains. Fund managers of all types are flocking to Asian tech stocks in their 2026 portfolios. George Molina, trading head at Templeton Global Investments, noted that demand from hedge funds, long-only funds, and passive funds is flowing into the Korean and Hong Kong markets. In Japan, he also observed that investors who cut back on AI exposure at year-end are now rebuilding their positions. **Earnings Growth Potential Surpasses U.S. Stocks** Beyond valuation advantages, higher earnings growth potential is another key driver of bullish sentiment. According to Bloomberg data, as Asia’s two largest tech-weighted markets, listed companies in Korea and Taiwan are expected to see EPS growth of 79% and 36% respectively over the next 12 months. By contrast, Nasdaq-listed companies’ expected growth rate is just 28%. This growth potential is directly reflected in stock prices. Asia’s three biggest tech stocks—TSMC, Samsung, and Korean peer SK Hynix—have surged 8% to 16% so far this year. Hua Hong Semiconductor’s share price is up more than 20%. With Samsung benefiting from rising memory chip prices and reporting stellar preliminary results, market attention this week is shifting to TSMC's full-year earnings report. Based on expectations for improved profitability, about six brokerages have raised their price targets for the stock since the start of the year. **The Momentum Behind Chinese Tech Stocks’ Recovery** Meanwhile, the Chinese market is also a key component of investing in Asian tech stocks. As DeepSeek publishes research on more efficient AI development methods, and Kuaishou’s video editing AI model gains global traction, enthusiasm for China’s tech prowess has continued to heat up at the start of the year. According to Bloomberg, the earnings growth of China’s tech giants index is expected to see a major turning point in 2026, likely surpassing the U.S. “Magnificent Seven” for the first time since 2022. Additionally, buoyed by this optimism, AI-related companies lined up for listings in Hong Kong and mainland China are on the rise. Just last week, Minimax and Zhipu AI both debuted on the stock market. Gary Tan, portfolio manager at Allspring Global Investments, said: “Artificial intelligence is a multi-year global growth driver, and North Asia’s technology ecosystem—spanning hardware, software, and infrastructure—puts the region at the forefront of this trend.” Currently, concerns are mounting about large tech companies’ plans to invest hundreds of billions of dollars in AI infrastructure. Bloomberg data shows that capital expenditures by Microsoft, Google, Amazon, and Meta are expected to rise 34% next year to about $440 billion. Such massive spending has also sparked debate over whether the AI boom could turn into a bubble. Risk warning and disclaimer The market has risks, and investment must be cautious. This article does not constitute personal investment advice and does not take into account the individual investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions expressed herein are suitable for their specific situation. Investments made based on this article are at your own risk.