South Korea, UAE Named Top AI Contenders Outside U.S. and China: Bank of America

South Korea and the United Arab Emirates are emerging as the strongest contenders in the global artificial intelligence race outside of the dominant United States and China, according to a new report from Bank of America. The analysis highlights how a select group of nations are positioning themselves to capitalize on the next wave of AI development by focusing on specific niches rather than competing directly with the two leaders.

The U.S.-China Duopoly

The AI landscape is becoming increasingly concentrated around the U.S. and China, the BofA report stated. Washington's lead is secured by 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.

Given this concentration, other economies are strategically aiming to capture AI-driven growth through roles in semiconductor supply chains, data-center investment, and fostering broader AI adoption across their industries.

Leading the Pack

Bank of America identified South Korea as the strongest overall AI contender over both the short and long term. The firm cited the country's unique combination of exposure to semiconductor manufacturing, rapidly expanding AI adoption, supportive government policies, and an ability to translate AI deployment into long-term productivity gains.

The United Arab Emirates was ranked as another leading contender, supported by heavy government investment, abundant energy resources, and one of the world's highest AI adoption rates. However, the report noted that geopolitical risks remain a key uncertainty for the country.

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Other nations forming a strong second tier of AI leaders include:

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

Strategic Niches and Future Challengers

Among emerging markets, BofA highlighted India as the clearest long-term AI challenger. While India currently lacks the semiconductor manufacturing base of some peers, it is already one of the world's largest AI adoption markets. The report suggests stronger policy support could significantly improve its outlook, though labor-market disruption remains a key challenge.

The analysis also pointed to Taiwan, Australia, and Japan as near-term beneficiaries of the global AI infrastructure build-out, owing to their importance in semiconductor manufacturing, critical minerals, and data-center supply chains. Finally, BofA emphasized that abundant and reliable energy is an increasingly important competitive advantage, giving an edge to countries such as Canada, France, and the UAE as computing workloads expand.