Without the leadership of the red-hot U.S. tech sector, the S&P probably wouldn’t be making new highs right about now, especially as the tariff deadline looms while new tariff threats are made. In any case, it’s been a mistake to bet against America’s high-tech high-flyers, even as valuations climbed a bit.
In any case, those hesitant in buying (more) top U.S. tech names due to the strength of their rallies and the relative loftiness of their valuations may find more comfort in some of the overseas tech plays, many of which stand to participate in the global AI boom. Indeed, the valuation gap between U.S. tech stars and their international counterparts, I believe, is the number-one reason to consider buying abroad this July.
Additionally, there are scenarios that could see the U.S. market correct as some of the international names proceed higher, like back in the first half of the year. While the relative strength of international versus the U.S. markets didn’t last all too long, it’s never a bad idea to be more globally diversified should such an isolated pullback ever happen again.
Here are three international names that look like great bets, especially if your portfolio is a bit light on the non-U.S. tech names.
Taiwan Semiconductor
Most rivers run in the semiconductor waters run through Taiwan Semiconductor (NYSE:TSM). The global semi manufacturing behemoth really benefits from the economies of scale, with cost efficiencies and continued optimization that make it so incredibly hard to compete with the Taiwan-based firm, which is so critical to the semi scene and the next stage of the AI boom.
Whether the future of AI is closer to the cloud or the edge, Taiwan Semiconductor will benefit greatly. And as robotics, self-driving vehicles, AI agents, and superintelligence fuel demand for even more chips across a broad range of chip designers, it seems like the global chip foundry giant will have a steady flow of business to command an above-average rate of growth.
Charles Shi over at Needham recently praised TSMC for its multi-year growth potential, citing that the firm may not encounter “a competitive challenge” in the coming years. Indeed, he’s absolutely spot on. It’s just too daunting a task (not to mention obscenely expensive) to keep up with Taiwan Semiconductor.
Add the AI revolution into the equation, and TSM stock certainly stands out as a name to stash away for the long haul. At 26.5 times trailing price-to-earnings (P/E), shares look too cheap given the magnitude of stable growth you’ll get. The fast-growing 1.45% dividend yield is just another reason to pick up shares at all-time highs north of $230 per share.
Alibaba
Alibaba (NYSE:BABA) is another high-tech value stock that may be worth buying into recent weakness. Of course, Alibaba shares have yet to recover from the cliff it fell off in 2021. And while shares have gained ground so far this year, now up 25%, it’s the low 14.5 times trailing P/E that makes the Chinese tech titan worth considering as U.S. tech valuations start getting uncomfortably lofty again. The company recently planned to invest $7 billion more into e-commerce while committing to building data centers in Malaysia and the Philippines.
With an impressive cloud growth engine to concentrate on while the Chinese consumer looks to bounce back, perhaps the long-time laggard is finally worth the benefit of the doubt now that expectations have been lowered so drastically. Indeed, the “AI + Cloud” engine seems to be in the growth driver’s seat. And it may be far more resilient than investors expect, even as China looks to get back on the growth track.
Of course, Alibaba won’t be easy to hold, given its history of immense volatility, but if you want value outside of the U.S., the name seems difficult to pass up.
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