Asia’s technology sector has started 2026 with strong momentum, as investors increasingly rotate toward the region’s chipmakers, hardware suppliers, and AI-focused companies.
The rally reflects a growing belief that Asia offers a better balance between valuation and growth potential compared with other global tech hubs, positioning it as a central beneficiary of the next phase of artificial intelligence expansion.
Key Takeaways
Asian tech stocks are outperforming as investors rotate toward the region’s semiconductor and AI ecosystem.
Strong earnings momentum and relatively low valuations are reinforcing confidence in Asia’s tech sector.
Capital inflows into key Asian markets suggest investors expect the outperformance to continue into 2026.
Strategists at Goldman Sachs Group have turned overweight on Asian technology shares, pointing to accelerating AI-related demand and valuations that remain attractive despite recent gains. Citigroup echoes that view, noting that long-term global investors are steadily increasing exposure to Asia because of its critical role in the semiconductor supply chain and the scope for earnings surprises.
So far this year, a broad Asian technology benchmark has climbed roughly 6%, comfortably ahead of major global tech peers. The performance gap highlights a regional reallocation, with investors questioning whether mature tech markets can continue delivering outsized returns after several years of strong rallies, while Asia is still seen as under-owned and structurally important.
Semiconductor strength fuels the rally
Corporate results have reinforced confidence in the region. Samsung Electronics recently reported preliminary operating profit that more than tripled, driven largely by improving memory prices. At the same time, Taiwan Semiconductor Manufacturing Co. exceeded revenue expectations, underlining resilient demand from advanced computing and AI workloads. These updates have helped cement Asia’s position at the core of global chip production.
Valuations remain a key part of the appeal. The MSCI Asia Pacific Information Technology Index is trading at a forward price-to-earnings multiple well below comparable global technology benchmarks, even after significantly outperforming since late 2024. For many investors, this combination of earnings momentum and relatively modest pricing defines the region’s current attractiveness.
Capital flows return to North Asia
Money managers setting up portfolios for 2026 are increasingly allocating to Asian technology markets. According to George Molina of Templeton Global Investments, demand is coming from a mix of hedge funds, long-only managers, and passive strategies, with notable inflows into South Korea and Hong Kong. In Japan, investors who trimmed AI exposure toward the end of last year are gradually rebuilding positions.
These flows have translated into sharp share price gains. SK Hynix, Samsung, and TSMC have all advanced by high single-digit to mid-teen percentages since the start of the year. In Hong Kong, Hua Hong Semiconductor has surged more than 20%, reflecting renewed interest in regional chip capacity and specialization.
Earnings outlook supports optimism
Beyond price performance, earnings growth expectations are driving enthusiasm. Analysts forecast that aggregate earnings per share in South Korea and Taiwan – Asia’s two most tech-heavy equity markets – could rise sharply over the next 12 months, far outpacing broader regional averages. With Samsung’s early results now public, attention is turning to TSMC’s upcoming earnings update, where improving profitability expectations have already prompted multiple brokerage upgrades.
Still, risks remain. Vey-Sern Ling of Union Bancaire Privee warns that a slowdown in global AI spending or rising geopolitical tensions, particularly around Taiwan, could disrupt sentiment. While the long-term AI theme remains intact, investors are watching closely for any signs that capital expenditure plans across the tech ecosystem may cool.
China’s role in Asia’s tech narrative
China continues to be a crucial pillar of the broader Asian technology story. Optimism has been supported by advances in AI efficiency, growing global adoption of Chinese-developed models, and Beijing’s push for technological self-sufficiency. Earnings growth for China’s largest tech companies is expected to accelerate in 2026, potentially marking a turning point after several subdued years.
Adding to the momentum is a steady pipeline of AI-focused companies preparing to list in Hong Kong and mainland markets. Recent debuts of firms positioned as challengers to global AI leaders have strengthened the view that Asia’s innovation ecosystem spans hardware, software, and infrastructure.
As Gary Tan of Allspring Global Investments notes, Asia’s integrated technology landscape places it at the center of a multi-year global AI growth cycle. For investors, the region’s strong fundamentals, improving earnings outlook, and pivotal role in the semiconductor chain are increasingly hard to ignore as 2026 gets underway.
