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Investors are nervous that AI's payoff may not justify the massive spending behind it, but some markets could win either way. That dynamic is playing out most clearly in East Asia, where South Korea and Taiwan are emerging as major beneficiaries of the global AI buildout.
On Friday, South Korea's benchmark Kospi index breached the key 8,000 level before falling back. It has surged about 80% this year. The rally has pushed memory-chip giant Samsung Electronics above a $1 trillion valuation, while rival SK Hynix is closing in on the milestone as demand for AI memory chips explodes. Taiwan has also ridden the wave.
Its benchmark index, the Taiex, has climbed about 12% over the past month and is up over 40% this year, helped by enthusiasm for Taiwan Semiconductor Manufacturing Company, the world's dominant advanced chipmaker.
"Asian technology companies often act as key suppliers of critical components and solutions, are less at risk of having to select the ultimate 'winners,' and are more likely to benefit broadly from the growth of global investment in this sector," said Stephen Li Jen, the CEO of investment manager Eurizon SLJ Capital, on Wednesday. That contrasts with the US, where major tech companies are absorbing enormous capital expenditures as they race to build AI infrastructure, Jen said.
The contrast is drawing more attention as Wall Street debates whether the AI spending boom will ultimately pay off. Jen said South Korea's rally has been amplified by yearslong corporate-governance reforms and shareholder-friendly policies that echo Japan's market revival, helping broaden gains beyond AI-related stocks.
"Besides semiconductors and the memory sector, interesting opportunities are emerging in other sectors, including financials, industrials, and holding companies, each supported by specific drivers but all aligned with a structural improvement in quality and profitability," he said. Goldman Sachs recently called South Korea its "highest conviction view" in Asia, predicting more upside ahead for the Kospi. It pointed to the country's dominance in memory chips and its central role in booming AI infrastructure spending.
The bank also said Taiwan remains one of the "cleanest global expressions" of the AI boom, with TSMC's dominance and resilient AI-driven earnings continuing to support the market.
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