Review of global technology stock trends in 2025 and outlook for 2026: AI leading+domestic replacement as the core logic

The Zhitong Finance App learned that looking back at the technology industry's market performance this year, US stocks, A/H stocks, and other markets in the Asia-Pacific region, and technology-related indices have generally performed better than the general market. Especially since August, the trend of technology stocks outperforming the market has become even more obvious.

According to the data, in terms of A-shares, the Shenwan Electronics/Communications/Computer Index significantly outperformed the market this year. Early in the year, benefiting from the strong rise of DeepSeek and the revaluation of mainland China's technology assets, had a good start. Afterwards, due to adjustments in market sentiment and risk aversion due to trade agreements, market volatility increased in March, and technology stocks pulled back somewhat. However, judging from earnings since the beginning of the year, it did not outperform the market and showed relative resilience. Since August, as liquidity continues to be abundant, technology stocks have become popular again, clearly outperforming the market. Since October, risk aversion in the market has once again increased, and some institutions have begun to hope to lock in profits, causing some capital to flow out of the technology sector, and technology stocks to pull back again.

Overall, technology stocks outperformed the market this year, mainly because artificial intelligence is still the main line of investment. This mainly involves AI-related computing, communication, and memory chips, as well as EDA, semiconductor equipment, and foundry related companies upstream in the industrial chain.

Looking at the breakdown, the trend of the Shenwan Electronics Index is basically similar to that of the Shenwan Communications Index, both benefiting from DeepSeek's impetus on valuation and the high liquidity market since August. The constituent stocks of the Shenwan Electronics Index include companies strongly related to AI computing/storage/communication chips and industrial chains (such as PCBs, advanced manufacturing processes, semiconductor equipment), while many companies related to the optical communication industry chain (such as optical modules, MPO, etc.) in the constituent stocks of the Shenwan Communications Index benefit from AI narratives and the logic of autonomous and controllable industrial chains. The two indices adjusted somewhat in March and April due to uncertainty in the external environment. The constituent stocks of the Shenwan Electronics Index involved export-oriented industrial chain companies such as mobile phones and PCs, and some optical communication companies involved in the Shenwan Communications Index constituent stocks were leading suppliers to leading overseas AI design companies.

The Shenwan Computer Index fluctuated greatly in the first quarter. At the beginning of the year, software stocks received strong attention from the market. Software companies could use large models to reduce costs and improve efficiency. At the time, the market may think this is most beneficial to software companies that use generative AI to provide services to vertical industries. Since August, although the Shenwan Computer Index has outperformed the market, the increase has not been as high as that of hardware. The market believes that this is mainly due to the early implementation of AI applications. Upstream cloud vendors are still continuously increasing capital expenses. Hardware semiconductors have higher technical barriers and trade barriers, and there is more room for upward valuation.

In terms of Hong Kong stocks, the Hang Seng Technology Index benefited from the accelerated influx of capital from the south at the beginning of the year. Since the beginning of the year, it has risen by more than 30%, outperforming the Hang Seng Index. Compared with A-share technology stocks, the increase is also greater. Compared to A-shares, Hong Kong stocks were more affected by external uncertainty in March and April. They also showed a sharp correction due to a larger increase in valuation at the beginning of the year, but they also showed relative resilience, and did not outperform the market from the beginning of the year to July. Since the liquidity market in August, Hang Seng Technology and the Internet, innovative drugs, and new consumption have “blossomed” in the short term, jointly driving the Hang Seng Index to rise.

Beginning in mid-late October, Hang Seng Technology showed greater upward resilience. Since November, the Hang Seng Technology Index and Hang Seng Index have both rebounded, and as sectors with relatively large gains this year, including technology, innovative drugs, and new consumption, the correction was even greater.

The market believes that the correction is more due to macroeconomic factors, such as increased uncertainty about the Fed's interest rate cut path, a certain degree of weakness in US macro data, and sector rotation effects.

In terms of US stocks, the advent of DeepSeek at the beginning of the year may cause investors to think that training and inference costs for future big models will be drastically reduced, and the market believes that this may have the greatest impact on high-end AI chip companies. As a result, the S&P 500 index fell overall in the first quarter of this year, while NASDAQ 100 had a larger decline compared to the general market. Since the second quarter, market concerns about tariff policies have gradually eased, and so-called “TACO” transactions have appeared. In terms of fundamentals, the results of US technology stocks in each quarter of this year generally exceeded market expectations. Furthermore, the sovereign orders signed by Nvidia (NVDA.US) and AMD (AMD.US) in May, and long-term computing power orders signed by OpenAI with leading AI high-end chip designers including Nvidia, AMD, and Broadcom, which have been announced one after another since October, have driven global cloud companies' capital expenditure expectations to rise sharply, and their future visibility has increased accordingly, driving US technology stocks to continue to be strong and outperform the market. In terms of valuation, the price-earnings ratio of the US stock S&P 500 hardware and equipment index is currently at a relatively high level since January 2024, while the S&P 500 software and services index is relatively at the average level since 2024.

In terms of the Asia-Pacific stock market, the technology index is basically similar to the general market trend. So far, the industry's overall storage price outlook for 2026 is still positive, and channel research also shows that downstream mobile phone and PC manufacturers believe that next year's storage is still in a strong price cycle. The market believes that strong semiconductor and hardware stock prices have to a certain extent driven Asia-Pacific technology stocks to outperform the market since September.

Looking ahead to 2026, BOC International proposes to continue to focus on the main investment lines of artificial intelligence and domestic substitution to explore scarce resources in the industrial chain. The recommendations for investing in the hardware sector are as follows: