Why The AI Boom Is Reshuffling The Global Stock Market Hierarchy

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0:00The AI boom is reshuffling the global equity market rankings, with Taiwan and South Korea

0:06leapfrogging past long-established markets in Europe and North America. Taiwan has climbed

0:11past Canada to become the world’s sixth-largest equity market, while South Korea has moved into

0:17eighth place, ahead of the United Kingdom. All this happened within the span of just

0:22a few months because last December they were in the 9th and 11th places respectively. Now,

0:27such a shift is not unprecedented, but what is unusual is the speed at which these two have been

0:33climbing. But, this reordering isn’t necessarily being driven by broad economic growth. Instead,

0:39it’s about three companies at the heart of the AI hardware supply chain: Taiwan Semiconductor

0:44Manufacturing Company or TSMC – the world’s largest contract chipmaker, and South Korea’s

0:50two dominant memory makers – Samsung Electronics and SK Hynix. It's the AI theme which is driving

0:56things. So we have this kind of perfect positive storm of industry fundamentals which are resulting

1:03in very very rapid profit growth which are therefore powering the stocks. So, what does

1:07this reshuffle tell us about how AI is changing global stock markets? And what are the risks?

1:20To understand why the rankings are moving, it helps to look at what these markets are

1:25actually made of. MSCI’s indexes are commonly used benchmarks that track large- and mid-sized

1:31companies in each market. In Taiwan, information technology accounts for about 88% of the MSCI

1:38Taiwan Index, with TSMC alone making up about 57% of the benchmark. In South Korea, the index

1:46is also heavily weighted toward IT, at about 61% with Samsung Electronics and SK Hynix together

1:53making up about 54% of the benchmark. By contrast, Canada is still anchored in financials, energy,

2:01materials and industrials, with IT accounting for less than 10%. And in the U.K., financials,

2:09healthcare, consumer staples, industrials and energy dominate, while IT accounts for just

2:15about 1%. The London market has also struggled to retain and attract high-growth tech listings. Arm,

2:23the British chip designer, chose a U.S.-only listing in 2023, a move widely seen as a blow

2:30to London’s market ambitions. What we're seeing here, I think, is the perhaps you could say the

2:35delayed coming of age of the Asian stock markets. And the combination of that and the breadth of the

2:40markets and the amount of economic terrain which Asia covers I think is really what is driving

2:45this renewed interest in Asia and their equity markets moving up the capitalization spectrum.

2:51The common driver is AI infrastructure — the data centers, chips and memory needed to train

2:57and run AI systems. the U.S. hyperscalers. So Meta, Microsoft, Amazon and Google are set to

3:04spend around 720 billion on capex this year, up from around 415 billion last year. And virtually

3:12all of that capex goes into data centers. The U.S. still leads in AI chip design through Nvidia and

3:18AMD. But many of the most advanced logic chips are manufactured by TSMC, while high-bandwidth memory,

3:26or HBM – the memory used in AI accelerators – has become a key strength for SK Hynix and

3:32Samsung Electronics, with Micron also competing for share. That demand is already showing up

3:38in earnings. TSMC’s first-quarter 2026 revenue reached $35.9 billion, just above the top of its

3:46own guidance range, with a gross margin of 66.2%. Samsung Electronics reported an all-time-high

3:54quarterly revenue of about $89 billion. Its Device Solutions (DS) division, which includes memory,

4:01foundry and system LSI, posted about $54 billion in revenue. SK Hynix posted record

4:08quarterly revenue of about $35 billion, citing strong demand for high-value memory products.

4:14The conditions for these stocks are exceptionally favorable right now. And the key way to understand

4:19that is really from a demand supply perspective. Demand which already was strong has recently not

4:25not just been accelerating, it's taken a quantum step higher because of the transition to the

4:30agentic AI economy. The increase for for compute for computational capability is extraordinary. Now

4:37supply for the chips which are powering this just cannot keep up with that demand. And what that's

4:42doing is it's giving the manufacturers of memory and other related aspects very significant pricing

4:48power. That memory used to be a very cyclical industry in which essentially pricing of those

4:53chips happens on 3 to 6 month terms. So you buy a chip and you pay for it 3 months in advance. Now

5:00HBM but also conventional memory chips nowadays are being bought and priced in 3 to 5 year cycles.

5:08So pricing is set well in advance. Taiwan is the clearest example of how the AI boom can reshape a

5:14national stock market. TSMC manufactures advanced chips for many of the world’s largest technology

5:20companies and is central to the AI supply chain. It also accounts for more than 40% of Taiwan’s

5:27total stock market capitalization. Taiwan's export orders rose almost 66% year on year in a month of

5:34March, hitting an all-time high as well as the fastest growth in more than 16 years. But that

5:40strength creates a paradox. Taiwan’s market is rising because of its exposure to TSMC.

5:47But that also makes the market more vulnerable to any shock in semiconductors or geopolitics.

5:53In Taiwan's case, the market is perhaps somewhat more separate from the broader economy just given

5:59the concentration of the market in the heavyweight tech stocks and may therefore not be as reflective

6:04of the dynamics of the onshore economy. South Korea's rise looks different from Taiwan's. It

6:10is not dominated by one company. If you strip in Korea, Samsung and Hynix out of the calculation,

6:17the profit growth this year is still going to be 40 to 45%. 40-45% profit growth is still

6:22exceptionally strong and that's because there are other sectors in Korea which are also doing

6:26very well away from the chip story that includes defense ship building power equipment generation

6:32you've got the K-culture theme and you also have the whole theme of bottom-up corporate

6:36change through the value up program the market is actually deeper and broader and there's more

6:41opportunities than just the superstar memory stocks. But the AI-driven part of South Korea’s

6:47rally is still heavily concentrated in two companies: Samsung Electronics and SK Hynix.

6:52The key product is HBM. As AI models grow larger, memory bandwidth has become one of the biggest

6:59constraints in AI computing and that has made South Korean memory makers critical. AI models

7:05nowadays, they're they're trillions of parameters in size. Few years ago, they were billions. Now,

7:11they're trillions of parameters for a single model. So, this is where HBM comes in. Around

7:16the GPU, you have six or eight different stacks of HBM, which is chips that are stacked on top

7:23of each other. And whenever the GPU has to do a calculation, it draws upon those HBM

7:29stacks to pull in and push out values that it needs for the computation. South Korea's rise

7:35also comes with a caveat. Compared with Taiwan and China, its listed semiconductor sector is

7:41more concentrated at the top with fewer large public companies beyond Samsung Electronics

7:46and SK Hynix. AI has supercharged Taiwan and South Korea’s stock markets – but it has also

7:53made them more dependent on a small number of companies. If there's any kind of politically

7:58driven shortfall in terms of construction of data centers, then that could reverberate up

8:02to the hardware companies that that are that are supplying that and are the customers of that capex

8:07spend by the hyperscalers. Innovation risk where you've got very rapid changes in the tech space.

8:13I know of six for example private companies in the United States which are developing different

8:18kinds of chips. If one of them turns out to be something which changes the game in terms

8:22of the current configuration of chip supply and manufacturing that could be something

8:26which could be a shock to the incumbent stocks. A comparable concentration dynamic has appeared in

8:32other markets as well. What happened to Denmark and Saudi Arabia stock markets last year is a

8:38cautionary tale. So both of them were amongst the worst performers towards the end of 2025 and both

8:44of them have this one similarity. They are heavily influenced by one corporate giant respectively. In

8:50the case of Denmark, it is Novo Nordisk as well as its reliance on the obesity drug boom. And in

8:56the case for Saudi Arabia, it's the stock market's dependence on Saudi Aramco. And falling oil prices

9:03last year really hammered the company which in turn dragged down the entire index. So the

9:08message is quite straightforward. Concentration is all well and good when your star companies

9:13are shining the brightest, but when they're not, then the tables tend to turn really quickly. The

9:18big question now is whether this is a temporary semiconductor rally or something more structural.

9:25Some analysts believe the rally still has room to run, but that bullish case rests on one big

9:30assumption that AI infrastructure spending keeps translating into profits. Given how rapidly we've

9:37raised our earnings forecasts for Korea, we have also correspondently raised our Cosby targets

9:43first from 64 to 7,000 then to 8,000 and now most recently to 9,000. If the earnings do indeed come

9:49through both for this year but also continuing into next year, then we think that that cost

9:549,000 target is actually quite conservative, then we could see, you know, 10,000 or higher. And I'd

10:00say we would map what I just said in a similar vein onto Taiwan. Of course, so much depends in

10:05Taiwan's case upon a continuation of the tech hardware story. But since we do think that

10:10there's more to go there, then we correspondingly would think that there's also further upside.

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Why The AI Boom Is Reshuffling The Global Stock Market Hierarchy

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