BofA Identifies South Korea, UAE as Top AI Contenders Outside US-China Duopoly

A new report from Bank of America identifies South Korea and the United Arab Emirates as the strongest contenders poised to benefit from artificial intelligence development, trailing only the established dominance of the United States and China.

The analysis suggests that while the U.S. and China have a commanding lead, other nations are strategically positioning themselves to capture growth by focusing on critical niches like semiconductor supply chains, data-center investment, and broad economic adoption of AI.

The AI Power Tiers

According to the BofA report, the global AI landscape is increasingly concentrated around its two largest players. The U.S. maintains its lead through private investment, advanced chips, and computing infrastructure. Meanwhile, China leverages its vast manufacturing scale, lower energy costs, and control over processed critical minerals.

Rather than competing directly, a second tier of countries is emerging by carving out specialized roles. These nations aim to integrate into the global AI value chain and translate technology adoption into tangible productivity gains.

South Korea and UAE Lead the Pack

Bank of America singled out two nations as having the most compelling strategies and advantages outside of the top two.

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• South Korea was named the strongest overall contender for both the short and long term. The report cites its combination of deep exposure to semiconductor manufacturing, rapidly growing AI adoption, supportive government policies, and a strong potential to convert AI deployment into productivity growth.
• The United Arab Emirates was highlighted as another leading contender. Its strengths lie in heavy government investment, abundant energy resources, and one of the world's highest AI adoption rates. However, the brokerage noted that geopolitical risks remain a key uncertainty for the nation.

Other countries forming a strong second tier of AI leaders include Canada, Germany, Israel, the Netherlands, Singapore, Switzerland, and the United Kingdom, according to the report.

Long-Term Challengers and Infrastructure Plays

Among emerging markets, BofA identified India as the clearest long-term AI challenger. While currently lacking the semiconductor manufacturing base of its Asian peers, India already boasts a massive AI adoption market with diffusion levels comparable to some advanced economies.

The report also flagged Taiwan, Australia, and Japan as near-term beneficiaries of the global AI infrastructure build-out, given their critical roles in semiconductor manufacturing, critical minerals, and data-center supply chains. The challenge for these economies, BofA notes, is converting these supply-chain advantages into broader, economy-wide productivity gains.

Finally, the analysis underscores the growing strategic importance of abundant and reliable energy as AI's computing demands escalate. This gives an edge to countries with significant energy resources, such as Canada, France, and the UAE.