Something unusual is happening in global technology markets. For the first time in years, Asia's tech stocks are outperforming their American counterparts—and investors are taking notice.

A key Asian technology gauge has jumped approximately 6% since the start of 2026, handily beating the Nasdaq 100's 2% gain over the same period. The shift represents a meaningful rotation toward the companies that form the backbone of the global semiconductor supply chain.

The Numbers Behind the Rally

The performance gap is striking. Three of Asia's largest technology companies—Taiwan Semiconductor Manufacturing Company, Samsung Electronics, and SK Hynix—have surged between 8% and 16% in the first two weeks of trading.

In Hong Kong, the rally has been even more dramatic. Hua Hong Semiconductor has climbed more than 20%, while Shanghai Biren Technology, China's first GPU startup to list in Hong Kong, more than doubled on its trading debut. Shares opened at HK$35.70, well above the IPO price of HK$19.60, and surged as much as 119%.

Earnings Growth Expectations

The rotation is backed by fundamentals. Aggregate earnings-per-share for companies in South Korea and Taiwan's equity benchmarks—Asia's two most tech-heavy markets—are projected to climb 79% and 36% respectively over the next 12 months, according to consensus estimates.

Those growth rates dwarf what's expected from many U.S. tech giants, where years of AI-driven gains have pushed valuations to levels that make further outperformance increasingly difficult.

Why Investors Are Rotating Now

Several factors are driving the shift:

  • Supply chain positioning: Asian chipmakers sit at the center of global semiconductor production. As AI computing demand accelerates, these companies are capturing the lion's share of manufacturing revenue.
  • Valuation gap: After years of underperformance, Asian tech stocks trade at meaningful discounts to U.S. peers. TSMC, despite being the world's most important chipmaker, trades at roughly 20 times forward earnings—a bargain compared to Nvidia's multiple.
  • AI infrastructure buildout: The Stargate project and other massive AI infrastructure initiatives require unprecedented quantities of semiconductors, much of which must come from Asian foundries.

TSMC: The Indispensable Chipmaker

Taiwan Semiconductor stands at the center of the rally—and the global AI revolution. Goldman Sachs recently lifted its price target on TSMC's Taiwan-listed shares to NT$2,330 from NT$1,720, equivalent to roughly $370-$375 for the American depositary receipts.

Analyst Bruce Lu captured the bullish sentiment: "2026 is a year set to be all about AI."

TSMC's competitive moat continues to widen. The company's 2-nanometer chip revenue is expected to surpass both 3nm and 5nm production by the third quarter of 2026. The company plans to operate 10 2nm fabrication facilities across Taiwan and the United States, with production capacity expanding from 35,000 wafers currently to 100,000 wafers by the end of 2027.

China's AI Ambitions

China represents another compelling element of the Asian tech story. Enthusiasm over the nation's technological capabilities has grown in the new year, fueled by several developments:

  • DeepSeek's breakthrough: The Chinese AI company published research outlining a more efficient approach to developing artificial intelligence, suggesting that U.S. companies may not maintain their lead indefinitely.
  • Kuaishou's video AI: The video editing AI model developed by Kuaishou Technology has gained significant popularity, demonstrating China's consumer AI capabilities.
  • Self-sufficiency push: Beijing's drive for technological independence is accelerating investment across the semiconductor supply chain.

Industry-wide AI and cloud capital expenditure in China is projected to exceed $70 billion in 2026. While that's only 15-20% of U.S. hyperscaler spending, it underscores China's strategic push to build foundational layers for generative AI.

The Risks to Watch

The Asian tech rally is not without risks. Geopolitical tensions—particularly the U.S.-China technology rivalry—could disrupt supply chains at any moment. Taiwan, home to TSMC's most advanced facilities, sits at the center of these concerns.

A pullback in AI spending would also hurt Asian chipmakers disproportionately. If the AI boom proves less durable than expected, companies that have ramped capacity aggressively could find themselves with excess supply and compressed margins.

Investment Implications

J.P. Morgan remains optimistic that global AI tailwinds will continue to support tech exporters like Taiwan and South Korea throughout 2026. The firm notes that both Advantest and TSMC "should have strong years, no matter which companies win the AI arms race."

For investors, the message is clear: the AI trade is no longer just about American stocks. The companies building the physical infrastructure for artificial intelligence—the fabs, the memory chips, the testing equipment—are increasingly found in Asia. And right now, that's where the smart money is flowing.