Technology stocks led global markets higher in the first half of 2026. But the biggest winners were not in the United States. Stocks based in emerging markets and Europe outperformed their U.S. rivals.
The MSCI index that tracks large and mid-cap tech firms in emerging markets soared over 90% between January and June. European tech stocks in MSCI's index gained 44.8%. By contrast, MSCI's U.S. technology stock index rose 19.4%.
The same story shows up in other benchmarks. The pan-European Stoxx 600 Technology index jumped 23.4%. The S&P 500 Information Technology index increased 19.4%.
The tech-heavy Nasdaq 100 added 19.9%. The broader S&P 500 gained 9.55%.
Non-U.S. markets as a whole also outperformed. The MSCI Emerging Markets index gained 24%. South Korea's Kospi surged 101.1%.
Japan's Nikkei 225 gained around 39%. The pan-European Stoxx 600 gained more than 8%.
Why Non-U.S. Tech Won Big
The performance gap came from several forces. Market turbulence was driven by concerns over artificial intelligence, the conflict between the U.S. and Iran, and broader economic uncertainty. But Asian and European tech stocks, especially semiconductor companies, saw big gains.
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In the U.S., Microsoft shares shed 22.9% of their value in the first half. Nvidia added 7.3%. Apple, Microsoft, Broadcom, and Micron are top constituents of the U.S. version of MSCI's technology index. Alphabet is among the top constituents of the Nasdaq 100.
Outside the U.S., South Korean memory chip maker SK Hynix soared by around 300%. Taiwan's TSMC jumped 55.5%.
Dutch semiconductor equipment makers ASMI and ASML gained 93.3% and 86.8%, respectively. BE Semiconductor's shares more than doubled.
BlackRock Investment Institute noted in its midyear outlook: "AI raises the prospect of a permanent growth breakout by accelerating innovation itself. Yet the route to abundance, if we get there, runs through scarcity."
Columbia Threadneedle Investments senior economist Anthony Willis commented, "encouragingly, some of the pressures that weighed on markets in the first half now appear to be easing."
This rally in non-U.S. tech was fueled by surging demand for AI chips and semiconductor manufacturing equipment, especially from Asian and European suppliers. Companies like SK Hynix, which produces high-bandwidth memory for AI accelerators, directly benefited from the boom. Meanwhile, U.S. mega-caps like Microsoft faced investor skepticism over massive AI capital spending without clear near-term returns, contributing to their underperformance.
Leadership Shifts Away from the Magnificent Seven
Deutsche Bank strategist Jim Reid said, "While 'AI fever' continues globally, with benchmarks like the KOSPI index up over 100% year-to-date, leadership in the market has shifted away from the Mag 7 for now."
What to Watch
Investors are watching whether the Federal Reserve will raise interest rates again. The CME FedWatch tool shows a 66.3% probability that the Fed will keep rates steady at its July 2026 meeting. For September, the chance of at least a quarter-point rate hike is 66.9%.
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