Technology still dominates Asia’s market gains, but defence, infrastructure, energy and industrial shares are gaining momentum as governments raise spending and investors seek opportunities beyond AI.
Asia’s artificial intelligence boom is still doing much of the heavy lifting in regional markets, but it is no longer the only story. Manishi Raychaudhuri wrote in Reuters Open Interest that technology names account for six of Asia’s 15 best-performing sectors so far this year, yet the rest of the strongest performers are clustered in financials, energy, industrials and process industries. His argument is that investors chasing the region’s upside should not overlook the older parts of the economy that are benefiting from geopolitics, higher energy prices and a broad rebuilding cycle.
Some of the clearest opportunities are emerging in defence and infrastructure. Raychaudhuri pointed to rising military budgets worldwide, especially in Europe and the Middle East, and noted that NATO members agreed in June 2025 to lift annual defence spending to 5% of GDP by 2035. He also highlighted the growing push by Asian governments to build homegrown defence industries, with India targeting 70% indigenisation by 2027, Indonesia aiming for 60% local content by 2030 and Vietnam seeking 50% domestic inputs in selected weapons systems over the same period. In parallel, McKinsey has forecast $106 trillion in global infrastructure investment through 2040, with Asia expected to account for roughly 65% of that total.
That theme is being reinforced by public policy, not just private capital. The Asian Development Bank has said Asia and the Pacific need a more connected future, and at its 59th Annual Meeting it backed two large initiatives: a $50 billion Pan-Asia Power Grid and a $20 billion Asia-Pacific Digital Highway. The World Bank has also argued that East Asia can use renewable energy, electrification and industrial decarbonisation to strengthen competitiveness while improving energy security. Those pressures help explain why power generation, grid upgrades and industrial cooling are attracting money alongside the data-centre buildout tied to AI.
The energy transition is not the only non-tech route to returns. Raychaudhuri argued that Asia’s strength in clean energy technologies, including solar, battery storage, offshore wind and electric vehicles, could be supported by persistently high oil prices and the strategic value of energy independence. He noted that companies with overseas revenue and established foreign manufacturing footprints may be best placed to navigate tariffs and trade restrictions, citing FactSet data showing that BYD, Geely and CATL all draw meaningful shares of revenue from outside China. Still, he warned that these are not risk-free substitutes for big tech: government-led projects can be delayed or cut, price competition can spread abroad, and higher borrowing costs or inflation could still hurt Asia’s broader investment story. Even so, his conclusion is that the region’s old economy still offers substance beneath the AI headlines.
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