While the Nasdaq 100 has long represented the pinnacle of U.S. tech performance, recent market trends signal a shift: Chinese tech giants are now delivering superior growth, leaving many Western counterparts in the shade.
Accelerating Asian Tech Markets vs. U.S. Indices
China’s technology-heavy indices have made remarkable gains this year. The Hang Seng Tech Index in Hong Kong has advanced around 37%, while the broader Hang Seng Index surged approximately 23%. In contrast, the S&P 500 declined by 3.5%, and the Nasdaq Composite fell by roughly 7.8% over the same period.
Similarly, markets across Asia have outstripped performance in the U.S.: the MSCI Asia Information Technology Index climbed over 40% since April, significantly outperforming the Nasdaq 100.
These gains are supported not only by valuation metrics but also by real operational momentum. Chinese tech stocks continue delivering robust earnings-per-share (EPS) growth while avoiding the speculative P/E inflation common in American sectors.
Drivers Behind the Surge
Several key factors are underpinning this outperformance:
- Strategic policy support: Chinese government lifts measures to stimulate consumption and back innovation, particularly in AI and semiconductors, driving investor confidence.
- AI breakthroughs: Leaders like Alibaba are setting new benchmarks. Their AI revenue has more than doubled year-on-year, contributing to an almost 19% stock surge – fuelled by developments such as domestic AI chips . Similarly, DeepSeek’s lower-cost AI model disrupted the market and highlighted China’s growing independent innovation in AI.
- Structural re-rating: Institutional capital is flowing back into Chinese tech amid clearer regulatory frameworks and confidence in innovation-led value creation.
What This Means for Investors
While U.S. tech remains profitable with long-term infrastructure and R&D investments, Chinese tech is poised for an inflection point driven by both policy backing and cost-effective innovation.
A smarter allocation of capital – balancing exposure to mature U.S. platforms and high-growth, undervalued Chinese players, may offer the best of both worlds.
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