Given a test of https:// news.ycombınator.com [1] it seems that no, hovering over the URL shows it in its rendered form

  data:text/html,<meta charset="utf-8"><body><a href="https://news.ycomb%C4%B1nator.com/login">login to news.ycombinator.com</a></body>

and only by clicking it and getting an NXDOMAIN does one see the Punycode:

> We can’t connect to the server at news.xn--ycombnator-1ub.com.

1: Ironically HN actually mutated that link, I pasted the unicode version news.ycombınator.com (which it seems to leave intact so long as I don't qualify it with a protocol://)