BofA Identifies South Korea, UAE as Top AI Contenders Beyond US-China Dominance

South Korea and the United Arab Emirates are emerging as the strongest contenders in the global artificial intelligence race behind the dominant United States and China, according to a new report from Bank of America. The analysis highlights a group of nations positioning themselves to capture growth from the next phase of AI development by focusing on specific niches rather than direct competition.

U.S. and China Maintain Lead

The AI landscape remains heavily concentrated around its two largest players, the report states. Bank of America notes that the U.S. retains its lead in private investment, advanced semiconductors, and computing infrastructure. Meanwhile, China leverages its manufacturing scale, lower energy costs, and its dominance in processed critical minerals.

Other economies are strategically avoiding a direct challenge to these two leaders, instead focusing on areas like semiconductor supply chains, data-center investment, and driving broader AI adoption across their economies.

South Korea and UAE Lead the Pack

Among the chasing pack, Bank of America identified South Korea as the strongest overall AI contender for both the short and long term. The country's strengths lie in its combination of semiconductor manufacturing exposure, rapidly expanding AI adoption, supportive government policies, and an ability to translate technology deployment into productivity gains.

The United Arab Emirates also ranked as a leading contender, propelled by significant government investment, abundant energy resources, and one of the world's highest AI adoption rates, according to the brokerage. However, the report noted that geopolitical risks remain a key uncertainty for the nation.

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A strong second tier of AI leaders was also identified, including:

• Canada
• Germany
• Israel
• The Netherlands
• Singapore
• Switzerland
• The United Kingdom

Long-Term Challengers and Niche Strengths

Looking at emerging markets, BofA highlighted India as the clearest long-term AI challenger. While currently lacking the robust semiconductor manufacturing base of its Asian peers, India is already one of the largest markets for AI adoption with diffusion levels comparable to some advanced economies. The report suggests that stronger policy support could significantly improve its outlook, though potential labor-market disruption is a key challenge.

The report also named Taiwan, Australia, and Japan as near-term beneficiaries of the global AI infrastructure build-out, citing their critical roles in semiconductor manufacturing, critical minerals, and data-center supply chains. BofA cautioned, however, that these countries face hurdles in converting these advantages into broader economic productivity gains.

An increasingly crucial factor for AI competitiveness is access to abundant and reliable energy, the report concludes. This gives an edge to countries like Canada, France, and the UAE as data-center capacity and computing demands continue to expand.