* European tech shares soar since early April

* Iran war clouds broader stock market

* Some analysts say rally has further to run

By Dhara Ranasinghe

LONDON, May 22 (Reuters) - A strong rally in tech stocks

has largely gone under the radar against a darkening backdrop

for European equity markets as the energy shock triggered by the

Iran war dampens economic growth.

The war has paused "Make Europe Great Again" trades, with the

region's shares expected to underperform U.S. peers as long as

it persists. Data shows euro zone economic activity fell at its

sharpest rate in more than two-and-a-half years in May.

Yet research from TS Lombard shows two baskets of AI-related

shares account for more than two-thirds of the positive

performance in European stocks over the past month and a half.

"The performance of our EU AI baskets since April is on par

with the Nasdaq, just a touch behind Taiwan," said TS Lombard

European and global macro director Davide Oneglia, referring to

the U.S. index and Taiwan's bourse.

"Look through macro chaos and don't ignore European AI

winners," Oneglia added.

One TS Lombard AI basket, made up of firms in the semiconductor

supply chain such as ASML, Infineon and

STMicroelectronics, has rallied by roughly 20% since

the start of April.

The other, up around 22%, is made up of companies in the AI

infrastructure buildout such as data centres and includes

Schneider Electric and Italy's Prysmian.

Gains in European tech shares are dwarfed by a 55% rise in

the South Korean index over the same period, LSEG data

shows. The Nasdaq 100 is up by roughly 21% and Taiwanese stocks

have rallied by around 28%, the TS Lombard report shows.

AI INFRASTRUCTURE BOOST

A renewed focus on AI, highlighted by strong U.S. tech

earnings since early April, as well as a push by Europe to

support tech infrastructure suggest the European tech share

rally could have further to run.

Seema Shah, chief global strategist at Principal Asset

Management, which manages around $578 billion, noted Europe's

renewed focus on innovation which has begun to show in the last

two years in defence, energy security and AI infrastructure.

"You are seeing capital expenditure into those areas. We do

think that those kinds of secular themes have remained pretty

strong and probably have been actually reinforced by the

conflict," said Shah.

Even after recent gains, European tech shares have a cheaper

valuation than U.S. competitors. The European tech stocks

sub-index trades at almost 28 times expected earnings, compared

with almost 35 times for the Nasdaq.

Oneglia said his analysis of European AI stocks focused on

the post-April period because that is when the AI theme

resurfaced globally, with strong earnings and investors changing

their minds on whether AI spending plans were excessive or not.

U.S. tech bellwether Nvidia ( NVDA ) on Wednesday released

first-quarter revenue that beat Wall Street expectations.

While Europe's STOXX 600 index has fallen just over 2% since

the Iran war began on February 28, the region's tech

shares have surged 10% and this week hit their highest level

since 2000.

Tech makes up just 10% of the European benchmark, which is

dominated by financials, industrials and healthcare.