Geopolitical Tensions Ease As AI Narrative Takes Center Stage, Hong Kong Tech Stocks Rally

Markets have begun to recover from the shock of the U.S.–Iran conflict, allowing technology shares to regain investor attention. In April, tensions in the Middle East moderated, and reports that the United States and Iran may resume talks, together with former President Donald Trump’s comment that the conflict with Iran is “close to ending,” helped restore market sentiment. Global equities advanced overnight, the Nasdaq extended a ten‑day winning streak—the longest since 2021—and the S&P 500 erased losses incurred during the Iran crisis, approaching record highs as major technology names regained appeal. Asian markets broadly strengthened, with Japan, South Korea, Taiwan and Hong Kong trading higher, although mainland A‑shares slipped into negative territory in the afternoon.

The rebound was accompanied by a renewed focus on AI and technology themes. Following the U.S. tech rally, Hong Kong technology stocks posted strong gains before trimming some of their intraday advances. At the time of writing, JD.com rose more than 5%, Baidu and Alibaba climbed over 4%, Bilibili, Kuaishou and NetEase gained in excess of 2%, and Meituan, Tencent and Xiaomi（01810.HK）also participated in the rally. The immediate catalyst for the move was the marginal easing of geopolitical risk, which had driven a global risk‑off posture in recent weeks. With a second round of talks reportedly under discussion and public statements suggesting an end to hostilities, risk appetite recovered and investors began to reallocate toward growth sectors. Analysts at Morgan Stanley observed that while energy flows through the Strait of Hormuz remain a watchpoint, oil markets may be signaling that the period of greatest concern has passed, and much of the prior repricing for geopolitical risk, private credit worries and AI disruption appears to be complete.

Concurrently, the AI narrative continued to underpin technology sector momentum. International and domestic internet leaders have accelerated AI initiatives: Nvidia released the open‑source quantum AI model Ising, OpenAI launched GPT‑5.4‑Cyber in competition with Anthropic, and OpenClaw is advancing AI from conversational prototypes toward practical, task‑oriented deployments. Domestic progress has been notable as well, with Alibaba’s multimodal model HappyHorse‑1.0 topping global AI video generation rankings and Tencent preparing to release its HunYuan 3.0 model later this month. Rising AI compute demand and associated cost pressures prompted China’s three major cloud providers to adjust pricing, with Baidu Intelligent Cloud issuing a price notice, Tencent Cloud announcing a second adjustment and Alibaba Cloud implementing a third increase within the past month. At the same time, hard‑technology initial public offerings have surged, as semiconductor and AI chip companies queue for listings on the Hong Kong Exchange. Chief Executive John Lee disclosed that more than 500 companies are currently awaiting listing in Hong Kong, with an increasing share coming from strategic sectors such as artificial intelligence, semiconductors, robotics and autonomous driving. By the end of March, Hong Kong new‑issue fundraising exceeded $14 billion (approximately HK$109.2 billion), ranking first globally and representing a 504% year‑on‑year increase in proceeds.

Market participants appear to be shifting attention away from the Strait of Hormuz. Doug Peta, chief U.S. investment strategist at BCA Research, noted that equity and broader financial markets seem less focused on the Hormuz situation. Signals from Wall Street suggest that the window to reenter technology stocks is opening. Notably, investor Michael Burry announced on April 10 that he had purchased shares of JD.com and Alibaba, increasing his JD.com position to slightly above 6% and establishing a new position in Alibaba at a level just below that. Burry characterized JD.com’s recent weakness as an attractive entry point. Research from Huatai Securities indicates that Hong Kong internet valuations remain at historically low levels and that profitability among leading technology firms has reached an inflection point, with consensus forecasts projecting more than 40% EPS growth in 2026. With clearer signs of industry deleveraging and ongoing cost‑efficiency measures, Q2 2026 could deliver both valuation and earnings upside. Industrial Securities suggested that April may present a buying opportunity as global markets transition from risk‑off to risk‑on; as risk aversion and oil prices ease, the U.S. dollar is likely to retrace some of the prior pessimistic pricing tied to geopolitical uncertainty and liquidity tightening. The imminent releases of Tencent’s HunYuan and DeepSeek models, upcoming industry conferences and expectations around a potential visit by Trump to China may help reverse the pessimism embedded in Hong Kong valuations.

Guangfa Securities warned that a sustained rally could trigger a short squeeze and amplify the rebound. The firm projected that the current upswing might last approximately one to one and a half months, with potential gains of about 20% for the Hang Seng Index and roughly 30% for the Hang Seng Tech Index, should the market continue to advance.