The technology sector emerged as the clear winner in global equity markets during the first six months of 2026. Despite a sharp sell-off towards the end of June, major US tech stocks posted significant gains, yet their overall performance lagged behind their international counterparts. Among MSCI's sector indices, the one tracking large and mid-cap tech stocks in emerging markets was the top performer, surging over 90% in the first half. A comparable European index rose by 44.8%, while the US tech index, whose top five constituents are NVIDIA, Apple, Microsoft, Broadcom, and Micron, gained 19.4%.
This trend extended to broader market benchmarks. From January to June, the pan-European STOXX 600 Tech Index climbed 23.4%, outperforming the S&P 500 Information Technology Index's 19.4% gain over the same period. The Nasdaq 100 Index, heavily weighted towards tech with constituents like NVIDIA, Apple, Microsoft, and Google parent Alphabet, advanced 19.9% in the first half. In comparison, the S&P 500 rose 9.55%, the Nasdaq Composite gained 12.79%, and the Dow Jones Industrial Average increased by 8.85%. The performance of these three major Wall Street indices was surpassed by several key global market indices.
Emerging markets continued their streak of outperformance, with the MSCI Emerging Markets Index rising 24% in the first half. South Korea's KOSPI Index soared 101.1%, while Japan's Nikkei 225 gained approximately 39%. In Europe, the pan-European STOXX 600 Index increased over 8%, the UK's FTSE 100 rose 5.7%, Germany's DAX Index gained about 1.9%, and France's CAC 40 edged up just over 3%. Southern European indices were particularly strong, with Spain's IBEX 35 surging 12.5%, Portugal's PSI Index rising 10.5%, and Italy's FTSE MIB Index climbing 14.7%.
Individual Stock Performance
Looking at individual stocks, NVIDIA rose 7.3% in the first half, but other major US tech stocks were constrained by sector volatility as investors continued to assess the development prospects of artificial intelligence, leading to increased turbulence. For instance, Microsoft shares declined 22.9% cumulatively over the six months. In Asian and European markets, robust gains in the semiconductor sector provided strong support for tech stocks. Taiwan Semiconductor Manufacturing Company (TSMC) shares surged 55.5% in the first half, while South Korea's SK Hynix skyrocketed approximately 300%. Dutch semiconductor equipment giants ASMI and ASML rose 93.3% and 86.8% respectively, and BE Semiconductor more than doubled.
Outlook for the Second Half
Global equity markets experienced significant overall volatility in the first half, with fluctuations in AI expectations, US-Iran tensions, and macroeconomic uncertainties triggering swings across various asset classes. The BlackRock Investment Institute noted in its mid-year outlook that AI "holds the potential to deliver sustained growth breakthroughs for the economy by accelerating innovation itself." However, the institute also stated, "The path to abundance must first pass through scarcity. This tension is also evident in other investment themes and is reshaping asset allocation landscapes."
The institute further pointed out, "Three core questions remain unresolved: whether an AI bubble has formed, what the costs will be, and who will ultimately capture the value? We maintain an overweight view on US equities and focus on bottleneck areas to participate in AI growth—including power, grids, storage, chips, and data centers—while avoiding bets on specific model winners. Physical AI—robotics, autonomous systems, and smart manufacturing—will be the next frontier."
Anthony Willis, a senior economist at Columbia Threadneedle Investments, commented in his second-half outlook, "It is encouraging that some of the pressures that weighed on markets in the first half appear to be easing." He believes geopolitical factors will remain important, but the primary market drivers in the second half may shift towards monetary policy. Willis stated, "As investors reassess whether the Federal Reserve needs to raise rates again and how frequently, market pricing will likely remain highly sensitive to economic data and central bank communications."
According to the CME FedWatch Tool, current market pricing indicates a 66.3% probability of the Fed holding rates steady at its July meeting, and a 66.9% probability of at least a 25-basis-point hike at the September FOMC meeting. Willis also noted that corporate earnings will remain a key focus. "The critical question is whether companies can translate capital expenditures into actual profits and generate substantial investment returns. Current market expectations for AI-related capex, revenue growth, and profitability are already elevated, meaning earnings reports could become significant triggers for market volatility."
Deutsche Bank analyst Jim Reid highlighted in a report released Tuesday four reasons behind the underperformance of the so-called "Magnificent Seven" tech stocks in June: unwinding of extreme positioning, concerns over AI hyperscaler capital expenditures, a more hawkish Fed stance, and rising chip costs. He stated, "Although the 'AI fever' continues to spread globally—as seen in South Korea's KOSPI Index rising over 100% year-to-date—market leadership has temporarily shifted away from the 'Magnificent Seven'."
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