Beyond U.S. Tech Stocks — Top Asia AI Opportunities for 2026
U.S. investors concerned about overconcentration of risk in Mag 7 and AI plays can their broaden exposure via Hong Kong and mainland markets.
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While it has been a good year for U.S. stocks, it has not been exceptional. The S&P 500 is currently posting a 17.1% advance for the year, with the Dow Jones Industrial Average up 13.7%, both lagging the 27.0% gain in the Global Dow.
Not even the tech-charged Nasdaq Composite is outperforming globally, up 21.2% for the year. In Asia, Japanese and Chinese stocks are easily clearing that bar. The Topix is up 24.2% and the Nikkei 225 up 28.3% in Tokyo, while Hong Kong’s Hang Seng is ahead a strong 28.5% and the Hang Seng Tech index up a similar 27.3%.
U.S. Exceptionalism Evaporates
Other global benchmarks in markets such as Brazil, Britain, Canada, Germany, Italy, Mexico and Spain have also outdone their U.S. counterparts. It’s been a year of “U.S. unexceptionalism,” when we entered 2025 with most predictions dead set on continued U.S. outperformance.
What’s more, the U.S. gains have also been highly concentrated, with 45% of the S&P 500’s advance coming from the Magnificent Seven: Alphabet (GOOGL) , Amazon.com (AMZN) , Apple (AAPL) , Meta Platforms (META) , Microsoft (MSFT) , Nvidia (NVDA) and Tesla (TSLA) .
Where should we look for gains in 2026? Given the strong performance of U.S. tech stocks, particularly those related to Artificial Intelligence (AI), it makes sense to seek to diversify beyond those U.S. names.
I have identified the chip-testing equipment maker Advantest (ATEYY) (T:6857) as my favorite Asia play for the year ahead. Both Advantest and chip-foundry industry leader (and perennial outperformer) Taiwan Semiconductor Manufacturing Co. (TSM) (TW:2330) should have strong years, no matter which companies win the AI arms race.
China AI Plays With Massive Trading Debuts
In terms of direct AI plays, China’s tech sector is the likeliest leader outside the United States.
The sector is also not without its froth. We have recently seen Moore Threads Technology (SH:688795) debut with a first-day gain of 425.5% on December 5. The “Nvidia of China” has held those gains, since advancing another 13.0% from its first-day closing price.
Likewise, Chinese AI chipmaker MetaX Integrated Circuits (SH:688802) leapt 692.9% by the end of its first day of trade on December 17. The company, formed by former executives from Advanced Micro Devices (AMD) , has seen its shares correct course since then but is still netting lucky purchases of its initial public offering shares a five-fold increase on their investment.
Such shares, trading on mainland Chinese markets, are off limits to overseas investors, at least directly. There’s also a whole lotta single-company risk.
China-Focused ETFs
Investors would be better off looking to exchange-traded funds to gain exposure. KraneShares has rolled out a range of China-linked ETFs such as the KraneShares Shanghai Stock Exchange Star Market 50 Index ETF (KSTR) – quite a mouthful, but providing access to 50 names on the high-growth Star market in Shanghai.
That is still a highly speculative play. For broader mainland China exposure, investors could turn to another ETF with a mouthful for a name, the KraneShares Bosera MSCI China A 50 Connect ETF (KBA). It tracks 50 stocks listed in Shanghai and Shenzhen, but available to offshore investors in Hong Kong via the Stock Connect scheme. That effectively screens for higher-quality names due to the eligibility requirements for mainland stocks to access the Hong Kong market.
There are other ETFs in the range such as the KraneShares CSI China Internet ETF (KWEB) , the KraneShares MSCI China Clean Technology ETF (KGRN), and the KraneShares MSCI All China Health Care Index ETF (KURE). Of those, KWEB would provide the purest China tech play.
My favorite call is an ETF that I’ve highlighted before, the KraneShares Hang Seng Tech Index ETF (KTEC) . It has posted middling performance of 19.1% in terms of 2025 gains. But I prefer to seek that exposure to purely Hong Kong-listed tech stocks. It does, however, lack exposure to the likes of Moore Threads and MetaX, at least unless they secure a Hong Kong listing.
I’ll be tracking these ETFs as we ease into 2026. U.S. investors concerned about overconcentration in AI and Mag 7 names would also do well to consider broadening their tech exposure to include a Hong Kong and/or China holding in the year ahead.
At the time of publication, McMillan had positions in NVDA, MSFT and KTEC.
