Bank of America Names South Korea, UAE as Top AI Challengers to US-China Dominance

A Bank of America report has identified a select group of nations poised to benefit from the next wave of artificial intelligence development, even as the United States and China solidify their lead in the sector. The brokerage named South Korea and the United Arab Emirates as the strongest contenders among countries seeking to capture AI-driven growth beyond the two superpowers.

The Emerging AI Landscape

Bank of America's analysis confirms the AI landscape is increasingly concentrated around the U.S. and China. The report notes that Washington leads in private investment, advanced chips, and computing infrastructure, while Beijing leverages its manufacturing scale, lower energy costs, and dominance in processed critical minerals.

Rather than competing directly, other economies are carving out strategic niches. These nations are focusing on areas like semiconductor supply chains, data-center investment, and accelerating the adoption of AI technologies across their domestic economies to drive productivity.

Top Contenders Identified

According to the report, South Korea stands out as the strongest overall AI contender for both the short and long term. Its position is bolstered by a combination of factors:

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• Exposure to semiconductor manufacturing.
• Rapidly expanding AI adoption.
• Supportive government policies.
• A demonstrated ability to translate AI deployment into long-term productivity gains.

The United Arab Emirates was also ranked as a leading challenger, propelled by heavy government investment, abundant energy resources, and one of the world's highest AI adoption rates. The report did, however, note that geopolitical risks remain a key uncertainty for the UAE.

Other Noteworthy Economies

Bank of America identified a strong second tier of AI leaders that includes Canada, Germany, Israel, the Netherlands, Singapore, Switzerland, and the United Kingdom. Among emerging markets, India was highlighted as the clearest long-term challenger due to its large AI adoption market, though it currently lacks a major semiconductor manufacturing base.

The report also cited Taiwan, Australia, and Japan as near-term beneficiaries of the global AI infrastructure build-out, thanks to their roles in chips, critical minerals, and data-center supply chains. Furthermore, BofA emphasized that abundant and reliable energy is becoming a critical competitive advantage, giving an edge to nations like Canada, France, and the UAE as demand for data-center capacity expands.