Are AI opportunities better outside the US?

When AI comes up in market conversations, the US usually quickly follows. This is for good reason. It holds many of the heavyweights, including Nvidia, Microsoft, and Alphabet. But it is far from the only region that’s benefitted from the AI boost.

On the other side of the globe, emerging markets have made their own market niches. These have occasionally jumped into the headlines, like in January when China-based DeepSeek released its new (and much cheaper) AI model that put Nvidia temporarily on its heels.

But Korea and Taiwan have also more quietly accumulated chunky gains. Like in the US, the market is highly concentrated and the few companies have pulled big weight.

Taiwan Semiconductor Manufacturing Company (TSMC) has had a total return of 38.2% in its local currency in the past year, as of 11 November. In the past five years, the growth expands to 254.5%. While Nvidia still beats that performance on a five-year basis, at 1,397% in terms of USD, in the past year it’s grown by a more humble 34.8%.

TSMC has been around since 1987, but in more recent years, it’s become the primary chip manufacturer for companies like Nvidia. Last year, the company’s senior vice president revealed that 99% of the world’s AI accelerators are made by TSMC. This creates a very slim window for competitors. 

But what about a bubble?

Almost as common as the excited conversations about the future of AI are the fears that it has been overvalued, and a dotcom-like bubble is ready to burst. To be sure, some of the most popular US companies are accompanied by massive capital expenditure plans, that could leave them struggling if something were to go wrong.

But some of the leading companies in Korea and Taiwan that are benefitting from the boost aren’t being forced into the same risks. They often play more of a provider role for companies like Nvidia, and their products are booked out years in advance. These include memory chip makers, where the top two producers are Samsung and SK Hynix, both based in South Korea.

How the regions are being valued

One way to evaluate the potential for the two regions is through price to earnings (PE) ratio. This measure takes a company’s share price and divides it by the earnings per share. Ultimately, it tells you how much investors are willing to pay for each dollar earned by the company.

In the US, we can see that PE ratios for the coming year are slightly muted compared to the last. For example, Nvidia had a PE ratio of 47.8 over the past year, but it’s now shrunk to 31.7. By any standard, these valuations are still high. And despite the growth past few years, it shows that many investors believe the ride still isn’t over. 

There’s justification for this. Nvidia has constantly met its earnings targets. In fact, the share price has been known to drop after the company exceeds its targets in results.

Other AI leaders in the US have also (so far) been able to present healthy numbers, which has kept investor faith high.

PE ratios of the largest AI competitors in the US

Source: Refinitiv, as of 5 November 2025

But when it comes to valuations of AI stocks in emerging markets, there’s a considerable drop in what investors will pay. TSMC has a PE ratio of just 20 despite its growth across the past year. And Samsung, whose share price is up over 70 in the past year, has a PE ratio of about a third of many of the top AI names in the US. 

PE ratios of top AI competitors in emerging markets

Source: Refinitiv, as of 5 November 2025

It’s not that these investments are simply being overlooked. While they might not hit the headlines as often as Nvidia or Google, they are still well-known and well-established in markets. The companies come along with their own challenges. 

Part of this is to do with their market listing. Taiwan and South Korea are both still often classed as emerging markets, due to the structure of their markets. And while this seems to be improving, it can add a level of friction for investors. They also have concentration risk that outstrips even that happening in the States. TSMC makes up about 10% of the iShares Core MSCI Emerging Markets ETF. It’s followed by Tencent at 4.4%, Alibaba at 3.1%, Samsung at 3%, and SK Hynix at 1.8%. TSMC’s concentration is higher than you find in the iShares Core S&P 500 ETF, where Nvidia’s allocation has topped out at about 8.5%. But notably, Apple makes up 6.9%, and Microsoft at 6.6%, which is significantly larger than the next emerging market allocations. 

For those who have grown uneasy with the US, it’s worth considering what has boosted other regions before adding exposure there. Although regional diversification is often helpful, if both areas are sensitive to the same sector, this can create more concentration than anticipated.