Asia Tech Strategy 3Q26: Record high valuations but earnings support intact....be selective on winners & add some laggards

Research evidence excerpt

Asia Tech Strategy 3Q26: Record high valuations but earnings support intact....be selective on winners & add some laggards

13 July 2026

Asia Quant Strategy & Asia Semis & Internet

Asia Tech Strategy 3Q26: Record high valuations but earnings

support intact....be selective on winners & add some laggards

Asia tech has had a strong start to the year, yet again, with market cap weighted performance Rupal Agarwal

+65 6326 7641 at 85% and equal weighted return at 40%. In this report, we join hands with our fundamental

rupal.agarwal@bernsteinsg.com tech analysts to present the opportunities within the sector.

Mark Li The top-down view: We remain constructive on the sector as earnings support remains

+852 2123 2645 strong with ample room for upward revisions to continue. However, valuation support is

mark.li@bernsteinsg.com

limited -after seeing peak valuation of 36x fwd. PE in May, Asia tech sector is now trading

at 30x fwd. PE ie. +1.8SD above 10yr avg and 62% premium to the market vs. 5yr avg Robin Zhu

+852 2123 2659 of 40%. On revenue multiple, the sector is trading at tech bubble level valuations of 5.1x

robin.zhu@bernsteinsg.com PS. Of the winning sub-sectors, we recommend trimming exposure towards Computer

Peripheral as earnings upgrade is at record high. However, for Semis and Communication/

Cheng Zhang, CFA, CQF Electronic Equipment, upward revisions are not at extreme yet, though valuation risk is high +852 2123 2636

cheng.zhang@bernsteinsg.com for equipment names that are trading at record high multiples on both 12m fwd. PE and

PS. The laggards ie. Internet, Entertainment, Interactive Media & Services have fallen to

Edward Hou, CFA trough valuations and earnings downgrade - while there is no clear bottom yet (except for