The tech sector emerged as a clear winner in the first half of 2026. But while U.S. Big Tech stocks enjoyed strong gains — despite a sharp sell-off at the end of June — they were largely outperformed by their international counterparts.
Of MSCI's sector-specific indexes, the index covering large and mid-cap emerging markets technology stocks was the best performer in the first six months of the year, with a gain of more than 90%.
Its European counterpart added 44.8%, while the U.S. version — whose top constituents include Nvidia, Apple, Microsoft, Broadcom and Micron — gained 19.4%.
The trend was also visible across other parts of the market. The pan-European Stoxx 600 Technology index jumped 23.4% between January and June, compared with the S&P 500 Information Technology index's 19.4% increase.
The tech-heavy Nasdaq 100 index — which counts Nvidia, Apple, Microsoft and Alphabet among its constituents — added 19.9% in the six months to June.
Comparatively, the S&P 500 gained 9.55% in the first half of the year, the Nasdaq Composite added 12.79%, and the Dow Jones Industrial Average rose by 8.85%. All three of Wall Street's major averages were outperformed by various major indexes located elsewhere in the world.
Emerging markets continued their broad outperformance, with the MSCI Emerging Markets index gaining 24% in the first half. South Korea's Kospi surged 101.1%, while Japan's Nikkei 225 gained around 39%.
The pan-European Stoxx 600 gained more than 8%, with London's FTSE 100 adding 5.7% in the first half, while Germany's DAX gained about 1.9% and France's CAC 40 rose by just over 3%.
Southern European indexes were standouts in the region, with Spain's IBEX 35 jumping 12.5%, Portugal's PSI index adding 10.5% and Italy's FTSE MIB gaining 14.7%.
Looking at individual tech stocks, Nvidia added 7.3% in the first half of the year — but other Big Tech stocks came out of the first half much more bruised by the volatility that gripped the sector as investors weighed up developments in the AI space. Microsoft shares, for example, shed 22.9% of their value in the first half of the year.
In Asia and Europe, tech shares were bolstered by bumper gains in the semiconductor space. TSMC shares jumped 55.5% in the first half, while Korea's SK Hynix soared by around 300%. Dutch semiconductor equipment makers ASMI and ASML gained 93.3% and 86.8%, respectively. BE Semiconductor's shares more than doubled in value.
What next for stocks?
Global equity markets were volatile in the first half of the year, as AI jitters, the U.S.-Iran war and macroeconomic uncertainty sparked turbulence in asset classes across the board.
In its midyear outlook, sent to clients on Tuesday, the BlackRock Investment Institute said 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. A similar tension is playing out across other investment themes — and reshaping portfolios," they said.
"Three questions remain unresolved: is AI becoming a bubble, how costly will it be, and who will capture the value? We stay overweight U.S. equities and focus on bottleneck opportunities to participate in AI growth without picking model winners: power, grids, memory, chips and data centers. Physical AI — robots, autonomous systems and manufacturing —is the next frontier."
In a note outlining his outlook for the second half of the year, Anthony Willis, senior economist at Columbia Threadneedle Investments, said that "encouragingly, some of the pressures that weighed on markets in the first half now appear to be easing."
While geopolitics will remain important, Willis said, the bigger market driver in the second half may be monetary policy.
"As investors reassess whether the Fed may need to raise rates again — and how often — market pricing is likely to remain sensitive to incoming data and central bank communication," he said.
Markets are currently pricing in a 66.3% chance of the Fed keeping rates steady at its July meeting, and a 66.9% chance that it enacts at least a quarter-point hike at the subsequent FOMC meeting in September, according to the CME's FedWatch tool.
Willis added in his note on Monday that corporate earnings will remain in focus as well.
"The critical question is whether companies can monetize that spending and generate an attractive return on investment," he said. "Expectations around AI-related capital expenditure, revenue growth and profitability are now high, which means earnings results could become an important source of market volatility."
In a note on Tuesday, Deutsche Bank's Jim Reid said there were four key reasons behind the underperformance of the so-called Magnificent Seven stocks in June: an unwind of extreme positioning, concerns over AI hyper-scalers' capital expenditure, a more hawkish stance from the Fed and rising chip costs.
"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," he said.
