Taiwan and South Korea overtake India in AI-focused stock surge

In short: Investors chasing AI-related stocks are shifting from India to Taiwan and South Korea, where big chip companies are driving market gains.

What's going on

India’s stock market has slipped behind Taiwan and South Korea in the past week, after strong jumps in chipmaker shares lifted those two markets. Chips are the specialized parts that power AI systems (like the engine in a car).

Foreign investors have pulled a net $26.4bn from Indian stocks so far this year, including a record $2.3bn in one day, according to India’s securities depository NSDL. The value of Indian shares held by foreign investors fell to a 10-year low of 7.3tn rupees ($76bn) as of June 1.

A key issue is that investors looking for clear “AI winners” do not see many direct options in India. India has no major companies building large language models, which are the AI systems behind tools like ChatGPT, and it has no big chipmaking industry. At the same time, foreign ownership of Indian IT services stocks, including firms like Tata Consultancy Services and Infosys, fell more than 36% from $60bn at the start of 2026 to $38bn by May 15.

What to watch

Several pressures are hitting India at once, including higher oil prices that have weakened the rupee, which can reduce foreign investors’ returns once they convert money back to dollars. Some banks, including Morgan Stanley, still argue India could do well longer term as manufacturing grows and AI helps workers become more productive. For now, watch whether India attracts new AI or chip-related companies, or whether investment keeps flowing to places where the biggest AI hardware firms are already listed.

Source: Financial Times