The Nasdaq 100 has surged 21% year-to-date, driven not by the "Magnificent Seven" (up just 10%) but by the Semiconductor sector, which has soared 66% amid AI enthusiasm and strong earnings.
However, this rally is narrow, as the S&P 500 excluding tech has gained only 3%, while Europe’s Stoxx 600 has risen 8%, with sectors like Basic Resources (+33%), Energy (+29%), and Tech/Telecoms (+28%) outperforming the Nasdaq.
Beyond Europe, Emerging Markets (MSCI EM Index +24%), led by Taiwan and South Korea’s chipmakers, and Japan’s Nikkei 225 (+17%) have also delivered outstanding performances.
This highlights that diversification beyond US tech—into European industrials, Asian equities, and emerging markets—can deliver stronger, more balanced returns amid the AI-driven rally.