Chinese chipmakers are expected to escape from a projected 20 percent downside for Asian technology stocks amid trade-related risks, according to Morgan Stanley.

The Asian tech sector has around 20 percent near-term downside should tariffs increase on computer chips and trade tensions reescalate, analysts including Shawn Kim wrote in a note. What’s more, they believe current consensus earnings estimates are too high.

“Lower broader tech exposure in the near term and hedge sector exposure,” the analysts wrote. Headwinds for the sector “add up to poor near-term risk-reward.”

Global investors’ enthusiasm over artificial intelligence has been a boon to Asian tech stocks, with a gauge tracking semiconductor shares in the region gaining more than 65 percent since the end of 2022. But that has also extended valuations, while earnings-per-share estimate revisions “have not seen meaningful improvements,” according to Morgan Stanley.