The Tel Aviv 125 Index returned 59.8% in the year to 30 September 2026. The ASX All Ordinaries returned 7.6%. Those are local-currency index returns, not fund returns, but the gap explains why fund managers from Australia to India are looking at Israel again.
Sagi Ben Yosef, managing partner at Alpha, which runs the Pengana Alpha Israel Fund, makes the bull case. Israel’s economy grew 119% between 2005 and 2025, he says, against 46% for the OECD. The Bank of Israel’s October forecast is for growth of 3.4% this year and 5.1% in 2027. Counting production abroad by Israeli companies, those figures become 5.6% and 7.5%.
Chips, AI and a young population
Technology is 18.3% of GDP. In 2025 it produced about US$85 billion of exports, roughly 58% of the country’s total. Ben Yosef points to demographics as well: fertility near 2.9 against about 1.5 for the OECD, and a population projected to rise from 10.1 million to as much as 17.6 million by 2050.
Foreign money has noticed. Overseas holdings on the Tel Aviv Stock Exchange hit a record US$154 billion in the second quarter of 2026. At home, 18.5% of every salary goes by law into pension savings. The exchange’s equity market value reached NIS 3.1 trillion, roughly $1 trillion, at the end of the Hebrew year in September.
The names that matter for AI are chip suppliers. Ben Yosef cites Camtek in advanced-packaging inspection, Nova in precision metrology and Tower Semiconductor, whose silicon photonics move data by light inside AI data centers. Tower reports third-quarter results on Monday. Analysts expect revenue up 32% from a year earlier, to $522 million, with earnings per share nearly doubling to $1.07.
The sell-off
The shares have not been a smooth ride. Tower rose about 170% from January to a June peak, then lost 41.8% of its value, according to Globes. Its market value is $18.9 billion, about $14 billion below the peak. When the Philadelphia Semiconductor Index dropped 7.2% in a day, with Intel down 28.6%, Tower fell 11.4%. Globes saw no major change in the company’s operations; the swings follow sentiment across the chip sector.
Politics added to it. After Israel’s inconclusive election, the blue-chip TA-35 slid about 3%, and the technology index lost 2.53% in one session. Nova fell 7.11% and Camtek 6.91% that day. Ittai Ben-Zeev, chief executive of the exchange, wrote an open letter urging party leaders to form a broad government. “Israel’s economic future cannot be held for ransom by political arguments,” he wrote. Investors, he said, “demand certainty, consistent policies, and a clear economic horizon.”
An Indian buyer
For India the sharper link is a deal. Affle, the Indian mobile-marketing group, has agreed to buy Israel’s Perion Network in an all-cash transaction valued at $420 million. Perion has no financial debt and held about $228 million in cash at the end of September. Once the deal closes, expected in early 2027, Perion will leave both Nasdaq and the Tel Aviv exchange. Affle expects a revenue run rate above $700 million in financial year 2028. On the BSE its shares closed at ₹1,345.00, down ₹37.60.
Sources
- Why Israel, why now: Increasing exposure to the Tel Aviv stock exchange | The Jerusalem Post
- Tel Aviv Stock Exchange
- Tel Aviv Stock Exchange CEO calls for unity government
- Israeli stocks extend losses after inconclusive election, TA-35 down 3% since vote
- Affle 3i to acquire Israel's Perion Network for $420 million in all-cash deal – CNBC TV18
- Tower 42% down from peak ahead of Q3 financials
Photo: Tsvika Israeli (CC BY-SA 3.0)
