Across Asia, the market-cap share of the ten largest Chinese, Indian, and Hong Kong firms has declined over the past year, signaling a lag in AI-driven leadership compared with Taiwan and South Korea, where AI winners have boosted benchmarks.

In tech-heavy markets, AI and memory-driven winners concentrate gains, but India, China, and Hong Kong show no single AI leader, leading to broader dispersion in their indices.

Taiwan and Korea exhibit higher benchmark concentration as AI-related winners push performance, with Taiwan up markedly and Korea’s Kospi effectively doubling this year.

Analysts note that de-concentration can damp short-term benchmark leadership but may offer resilience and broader earnings support, reducing risk through AI spending cycles.

India’s IT services sector faces questions about disruption or slower growth if AI shifts software development and delivery models, contributing to weaker AI-driven index momentum versus AI-heavy peers.

Investors should watch how traditional IT firms adapt to AI, whether Indian indices can benefit from AI-related infrastructure growth, and how IT services exports perform as signals of India navigating the AI transition.

Experts warn diversification can dampen AI-driven volatility but may leave markets behind in rapid AI cycles, highlighting a trade-off between concentration and breadth of AI exposure.

Diversification may provide stability for India, as lower concentration could cushion against a global AI spending slowdown and support a broader earnings base and domestic liquidity through potential market corrections.

India’s Nifty 50 remains led by traditional giants like Reliance Industries and HDFC Bank, with key tech names such as TCS and Infosys centered on software services, and AI disruption as a risk to these models, awaiting next-generation AI engines.

India’s market features a mix of legacy conglomerates and traditional tech firms, creating a diversified but vulnerable index that could see de-concentration as AI disruption emerges, with the Nifty 50 down around 8% this year.

Overall, Asia shows a divide: AI hardware and semiconductor winners drive gains while traditional service sectors lag, reflecting distinct regional AI investment dynamics.

China presents a nuanced picture with fragmented AI investment; notable AI-linked stocks like Cambricon Technologies, SMIC, and Yangtze Optical contribute to the CSI 300’s positive year, even as top-cap shares lose prominence.