The MSCI Asia Pacific index has recorded an increase of over 12% in 2026, while the Nasdaq 100 has declined by nearly 2%. This difference reflects how concerns about the impact of artificial intelligence on traditional sectors in the United States have benefited Asian markets, particularly major chip manufacturers leading the global supply chain. While U.S. indices like the S&P 500 and Nasdaq 100 have suffered declines due to fears that AI will affect software providers, legal services, and real estate, Asian stocks have shown resilience. The S&P 500 has dropped 0.2% this year, and the tech-heavy Nasdaq 100 has lost about 2%. This contrast highlights a shift in global investor preferences, now favoring hardware companies with pricing power, many of which are located in Asia. The rise in memory chip prices has benefited giants like Samsung Electronics, while Taiwan Semiconductor Manufacturing Co. (TSMC)'s key role as the world's leading contract chip manufacturer has boosted the Taiwanese market. According to Richard Tang, head of research at Julius Baer in Hong Kong, concerns in the U.S. focus on spending by major tech players, while Asia, being more production-oriented, continues to generate revenue regardless of who leads downstream innovation. Asia's strength lies in its ecosystem of advanced chip manufacturers and assemblers, essential for AI infrastructure. Recent comments from companies like Micron and Nvidia about chip shortages and sustained spending have reinforced confidence in the region. Samsung Electronics, for example, experienced its largest foreign purchase in a single day, boosting its shares by 6.4%. Additionally, global investors made their third-largest weekly purchase of Taiwanese stocks, despite a shorter week due to holidays. Japanese manufacturer Kioxia also benefited, with a 15% rise in its shares after reporting better-than-expected results due to AI demand. Meanwhile, the Nasdaq 100 lost 4.6% and about $1.5 trillion in market value over the last ten sessions, affected by declines in software companies and others considered vulnerable to AI. Stephanie Aliaga, a strategist at JPMorgan Asset Management, noted that fears in the U.S. translate into opportunities for Asia, especially regarding the infrastructure needed for generative AI. The weight of companies like TSMC in Taiwan's Taiex index is nearing 45%, tripling its presence from a decade ago, while Samsung and SK Hynix account for nearly 40% of the South Korean Kospi. The so-called 'AI Scare Trade' has also impacted real estate and insurance sectors in the U.S., but the effect has been less pronounced in Asia, as many local companies have yet to fully adopt disruptive technologies. The Topix insurance sub-index rose 6.2% since early February, and the real estate sector increased by 15%. Andrew Jackson of Ortus Advisors points out that traditional Japanese industries are more protected against AI disruption, which has reduced the correlation between Asian and U.S. markets to its lowest level since June 2022, according to Bloomberg data. However, Asia has not been completely insulated: software companies like Kingdee International and Indian tech service firms also experienced declines in line with their U.S. counterparts. Despite this, Asian stocks are expected to continue outperforming U.S. stocks, driven by their role in the AI value chain, attractive valuations, and higher profit growth. Elfreda Jonker of Alphinity Investment Management summarizes: “We invest in AI enablers like chip manufacturers. TSMC remains one of our top bets. All roads in AI lead to TSMC.”