AI stock gains stay concentrated in Taiwan, South Korea, and Intel

In short: Investors are still putting much of the AI-related market gains into a small group of chip and data-center companies, with Taiwan, South Korea, and Intel among the main beneficiaries.

What's going on

For much of the last two years, the biggest winners from AI have been companies that make the parts needed to run AI systems. That includes chips, memory (the fast storage inside computers), and the equipment inside data centers (large buildings full of servers).

In Asia, that has boosted Taiwan and South Korea in particular. Taiwan is home to TSMC, a contract chip maker that manufactures advanced chips for many brands (like a factory that builds products designed by other companies). South Korea is home to SK Hynix and Samsung Electronics, which supply memory used in many AI-focused chips.

Recent stock market moves have followed this pattern. Taiwanese stocks and South Korea’s KOSPI index have risen as investors bet that demand for AI-related chips will stay high. The upswing has been driven more by expectations around chip orders than by broad economic growth.

Intel is being talked about as an additional, but less certain, winner. Investors are watching its foundry business, which is Intel’s effort to manufacture chips for other companies. That could matter if more customers try to spread production across more factories, instead of relying so heavily on TSMC, similar to how retailers avoid using just one supplier.

What to watch

The key question is whether AI spending spreads beyond this small set of chip and infrastructure firms. If it does not, “diversification” will remain difficult for investors, because many AI-linked investments still end up depending on the same few semiconductor companies.

Source: NYTimes