The year 2026 has kicked off with a powerful rally for technology stocks across Asia, as investors increasingly bet that the region's momentum and superior performance compared to United States counterparts will continue throughout the year.
Investors Rotate Capital to Asian Tech Giants
Financial giants are leading the bullish charge. Strategists at Goldman Sachs Group Inc. maintain an overweight position on the sector, anticipating further gains fueled by skyrocketing artificial intelligence-related demand and what they see as reasonable stock valuations. Similarly, analysts at Citigroup Inc. report that global long-term investors are actively accumulating Asian tech shares. This confidence stems from the region's critical role in the global semiconductor supply chain and the significant potential for earnings growth.
The numbers tell a compelling story. A key Asian technology index has already jumped approximately 6% since the start of the year. This impressive gain handily beats the 2% rise in the Nasdaq 100 Index. This shift represents a growing investor belief that US tech stocks, after years of massive gains, may struggle to sustain their AI-driven rally, prompting a strategic rotation toward Asia.
Strong Fundamentals and Undervalued Opportunities
This investor confidence is firmly rooted in robust corporate performance. Samsung Electronics Co. recently posted preliminary operating profit that more than tripled, reaching a record high. Meanwhile, Taiwan Semiconductor Manufacturing Co. (TSMC) reported revenue that exceeded market estimates. Adding to the optimism are the stellar stock market debuts of several Chinese AI companies.
Dilin Wu, a research strategist at Pepperstone Group Ltd. in Australia, captured the sentiment: "This really comes down to a shift in where investors see the best risk-reward right now. US tech is like a mature gold mine — already rich in value. Asian tech, on the other hand, is like an under-explored mine — still undervalued but fundamentally strong, ready to reward those who notice it."
The valuation gap is stark. The MSCI Asia Pacific Information Technology Index is trading at a forward price-to-earnings multiple of 16.3 times. This compares to about 25 times for both the Nasdaq 100 Index and the Philadelphia Stock Exchange Semiconductor Index, highlighting the relative affordability of Asian tech.
Earnings Growth and Geopolitical Considerations
The bullish outlook is heavily supported by exceptional earnings growth forecasts. According to Bloomberg-compiled data, aggregate earnings-per-share for companies in the equity benchmarks of South Korea and Taiwan—Asia's two most tech-heavy markets—are projected to climb 79% and 36%, respectively, over the next twelve months. This dwarfs the forecast of 28% growth for firms on the Nasdaq.
With Samsung's strong preliminary results—boosted by higher memory chip prices—now public, market attention turns to TSMC's full-year earnings this week. The anticipation of improving profitability has already led about half a dozen brokerages to raise their price targets for TSMC's stock since January began.
However, experts advise caution. Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore, identifies key risks for Asian chipmakers: a potential pullback in AI spending by giant tech firms and geopolitical tensions, particularly concerning Taiwan. Concerns are mounting over the sustainability of the hundreds of billions of dollars that "Big Tech" companies like Microsoft, Alphabet, Amazon, and Meta have pledged to spend on AI infrastructure.
The China Factor in the Asian Tech Narrative
China remains a pivotal element of the Asia tech investment story. Enthusiasm has been buoyed by several factors: AI firm DeepSeek's research paper outlining a more efficient AI development approach, the rising global popularity of Kuaishou Technology's video editing AI model, and Beijing's continued push for technological self-sufficiency.
Bloomberg Intelligence data indicates that earnings growth for China's tech megacaps is poised for a major inflection point in 2026, when it is expected to overtake the famed "Magnificent 7" US tech stocks for the first time since 2022. Furthermore, a growing pipeline of AI-related companies seeking listings in Hong Kong and mainland China is underpinning the positive sentiment. Just last week, two firms seen as challengers to global AI leaders like OpenAI debuted on exchanges.
Gary Tan, a portfolio manager at Allspring Global Investments in Singapore, summarized the long-term view: "AI is a multi-year global growth driver, and North Asia’s technology ecosystem spanning hardware, software, and infrastructure positions the region at the forefront of this trend." The flow of money from hedge funds, long-only funds, and passive strategies into markets like South Korea, Hong Kong, and Japan suggests many investors agree, betting that Asia's tech rally has substantial room to run in 2026.
