A research report depicting a dystopian future for artificial intelligence has triggered a sell-off in global software stocks but has unexpectedly acted as a catalyst for Asian markets. Investors are shifting their focus towards chip manufacturers, data centers, and AI foundational model companies, where Asia holds a particularly strong strategic position. As previously reported, the study, released by Citrini Research and co-authored by Alap Shah, Chief Investment Officer of Lotus Technology Management, has sparked renewed concerns about the erosion of business models in the software sector. In an interview with Bloomberg Television, Shah stated that semiconductor firms, data center operators, and foundational model labs are the core beneficiaries of the AI trade. He named Taiwan Semiconductor Manufacturing Company (TSMC), Samsung Electronics, and SK Hynix as the most representative chipmakers and highlighted that China's MiniMax and KNOWLEDGE ATLAS have seen their share prices more than double this month.
This wave of Asian market gains, driven by tech hardware, has propelled the MSCI Asia Pacific Index to its best-ever start to a year relative to the S&P 500. Concurrently, data compiled by Bloomberg shows that the weekly correlation coefficient between the MSCI Asia Pacific Information Technology Index and the Nasdaq 100 Index has fallen to 0.45, its lowest level since October 2017, indicating a growing divergence in the performance of Asian and American tech stocks. This divergence reflects a structural rotation of capital—investors are moving away from early AI pioneers facing high costs toward hardware manufacturers with stronger pricing power, a segment where Asia holds a natural advantage.
**Semiconductors: The Biggest Winners in AI Investment Allocation** One of the core arguments of the Citrini report is the impending erosion of software business models, a concern accelerated by the rapid iteration of generative AI tools like Claude from Anthropic PBC. For Asian semiconductor companies, however, this trend translates to continuously expanding computing demands and capital expenditure. TSMC, Samsung, and SK Hynix are central to the Asian chip sector. TSMC now accounts for a hefty 45% weighting in the Taiwan Weighted Index, approximately triple its weighting a decade ago. Samsung and SK Hynix together represent nearly 40% of the weighting in South Korea's Kospi index, which has become one of the world's best-performing major equity indices this year. Reports from South Korea show semiconductor exports surged 134% year-over-year from February onward, and the Bank of Korea predicts economic growth this year will be "significantly higher" than last year's. Vey-Sern Ling, Managing Director at Union Bancaire Privee in Singapore, commented: "TSMC, Samsung, and SK Hynix are all direct beneficiaries of the ongoing growth in AI spending. The real AI panic trade began in the software industry, and most of the world's well-known software companies are listed in the United States."
**Asia-US Tech Stock Correlation Hits Seven-Year Low** This divergence trend is clearly evident in the data. According to Bloomberg, the weekly correlation coefficient between the MSCI Asia Pacific Information Technology Index and the Nasdaq 100 Index has dropped to 0.45, the lowest level since October 2017. Vey-Sern Ling also pointed out that other major components of the MSCI Asia Pacific Index—including banks, raw materials, and industrial companies—face relatively limited direct disruption from AI, which objectively further reduces the overall sensitivity of Asian markets to AI-related panic. Christopher Forbes, Head of Asia at CMC Markets, stated: "The decoupling has begun. Asian corporate earnings growth is expected to remain between 13% and 14% until 2027. Any argument emphasizing re-correlation while ignoring the differences in index composition is fighting the wrong battle."
The map of AI beneficiaries in Asian markets extends beyond traditional semiconductors. In China, emerging AI lab companies like MiniMax Group and KNOWLEDGE ATLAS have seen their shares surge over 100% this month, offering investors rare pure-play exposure to AI foundational models. Alap Shah also noted that Japan plays a critical role in the semiconductor equipment value chain and is an indispensable part of AI infrastructure development.
**Indian IT Services Sector on the Weaker Side** Not all Asian tech companies are benefiting from this trend. Indian IT service firms, represented by Tata Consultancy Services and Infosys, have seen a related tracking index fall more than 20% since Anthropic released Claude, facing business model pressures similar to their US software counterparts. Despite this, many market participants believe the logic for the overall outperformance of Asian tech stocks is sustainable. Supporting factors include their differentiated positioning within the AI ecosystem, relatively lower valuations, and stronger earnings growth expectations. Chetan Seth, Asia Pacific Equity Strategist at Nomura, said: "As long as the AI capital expenditure theme continues, Asian equity markets will demonstrate greater resilience. Asia is the manufacturing hub for the critical hardware infrastructure required for AI investment, and key Asian markets like South Korea are highly concentrated with companies benefiting from this trend."
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