BofA Identifies South Korea, UAE as Top AI Contenders Outside 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 identifies a handful of nations positioning themselves to capture growth from the next phase of AI development by focusing on specific niches rather than direct competition.

The US-China AI Landscape

The global AI landscape remains heavily concentrated around the United States and China, the report notes. Bank of America credits Washington's lead to its strength in private investment, advanced chips, and computing infrastructure. In contrast, Beijing's advantages lie in its manufacturing scale, lower energy costs, and dominance in processed critical minerals.

Other economies are strategically positioning themselves within the AI ecosystem, focusing on areas like semiconductor supply chains and data-center investment to drive growth.

Top Contenders: South Korea and UAE

Among the nations analyzed, Bank of America identified South Korea as the strongest overall AI contender for both the short and long term. The brokerage highlighted the country's unique combination of strengths:

• Exposure to the semiconductor manufacturing supply chain
• Rapidly expanding AI adoption across its economy
• Supportive government policies fostering innovation
• A strong ability to translate AI deployment into long-term productivity gains

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The United Arab Emirates was also ranked as a leading contender, propelled by heavy government investment, abundant energy resources, and one of the world's highest AI adoption rates. However, the report cited geopolitical risks as a key uncertainty for the nation.

Other Noteworthy AI Economies

The report also named a strong second tier of AI leaders, including Canada, Germany, Israel, the Netherlands, Singapore, Switzerland, and the United Kingdom. In emerging markets, BofA pointed to India as the clearest long-term challenger, noting it is already one of the world's largest AI adoption markets despite lacking a large domestic semiconductor base.

Nations like Taiwan, Australia, and Japan are positioned as near-term beneficiaries of the global AI infrastructure build-out due to their key roles in semiconductor manufacturing, critical minerals, and data-center supply chains. The analysis suggests these countries still face challenges in converting these advantages into broader economic productivity.

Energy as a Key Differentiator

Looking ahead, BofA emphasized that abundant and reliable energy is becoming an increasingly critical competitive advantage in AI. The massive energy demands of data centers and complex computing workloads give an edge to countries like Canada, France, and the UAE, which are well-positioned to power the industry's expansion.