Asia Technology WellCovered: Fundamentals

Many Asia tech companies combine durable product and technology leadership and favorable industry structures. This is translating into pricing power and, at times, monopolistic margins. In particular, Asian AI supply chain companies stand out: As the primary beneficiaries of AI capex spending, they are seeing rapidly accelerating revenues that, paired with margin strength, are driving strong earnings growth expectations. Despite this, Asia tech companies are still trading at a discount to global peers (Figure 1).

Figure 1

AI buildout is different from the dot-com bubble

Many investors draw parallels between now and the dot-com bubble. The comparison is understandable: Both periods were driven by transformative new technologies (AI versus the internet) and major infrastructure investment (data centers versus fiber roll-out).

But there are important differences. During the dot-com bubble, fiber capacity was largely unutilized, whereas today, hyperscalers and large language models are rationing compute given excess demand. This excess demand is cascading through the entire AI supply chain to the benefit of Asian companies providing that computing power.

All roads in AI lead to Asia

We see four key themes driving the opportunity set:

• AI across the full value chain: Asia is well positioned across the AI ecosystem, from enablers to platforms and applications. Strong and supply-constrained AI demand continues to drive investment across the semiconductor supply chain, reinforcing Asia’s central role in the global AI infrastructure buildout and benefiting leading companies across Taiwan, Korea, and Japan.
• Digital platforms and software monetizing AI: Internet and software companies are increasingly leveraging AI to drive engagement, efficiency, and monetization, representing the next phase of value creation beyond infrastructure.
• Automation and industrial technology: Structural drivers such as labor shortages and reshoring are accelerating demand for robotics and factory automation, particularly benefiting Japanese and Taiwanese leaders.
• Rising local champions: With continued digitalization and technology adoption across local markets, Asia’s innovators are leading in e-commerce, digital services, and next-gen connectivity, tapping into a rapidly expanding middle class.

As the opportunity set broadens beyond the information technology sector into digital platforms, automation, and beyond, an active approach becomes increasingly important in identifying the winners across Asia’s expanding tech landscape.

More than geographic diversification

Asia tech is a complement to global tech allocations not only geographically, but also in terms of sector and market-cap exposures. For investors, this creates a rare opportunity to access AI-driven growth and diversification benefits at a time when valuations remain compelling relative to fundamentals, with active management playing a key role to capturing the full breadth of the opportunity.