South Korea, UAE Named Top AI Contenders Outside U.S. and China: BofA

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 U.S.-China Duopoly

The AI landscape remains highly concentrated around the U.S. and China, the report states. Bank of America notes that Washington maintains its lead through private investment, advanced chips, and computing infrastructure. Meanwhile, Beijing leverages its manufacturing scale, lower energy costs, and dominance in processed critical minerals.

Faced with this duopoly, other economies are not attempting to challenge the leaders directly. Instead, they are strategically positioning themselves to benefit from AI-driven growth through roles in semiconductor supply chains, data-center investment, and accelerating the adoption of AI across their domestic economies.

Top Contenders Emerge

Among the nations outside the top two, Bank of America identified South Korea as the strongest overall AI contender for both the short and long term. The brokerage highlights the country's combination of exposure to semiconductor manufacturing, rapidly expanding AI adoption, supportive government policies, and an ability to translate AI deployment into productivity gains.

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The United Arab Emirates 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 cautions that geopolitical risks remain a key uncertainty. A strong second tier of AI leaders includes Canada, Germany, Israel, the Netherlands, Singapore, Switzerland, and the United Kingdom, according to the brokerage.

Niche Beneficiaries and Future Challengers

In emerging markets, the report highlights India as the clearest long-term challenger. While it currently lacks the semiconductor manufacturing base of some Asian peers, India is already one of the world's largest AI adoption markets with diffusion levels comparable to some advanced economies, though it faces challenges with labor-market disruption.

The report also identified Taiwan, Australia, and Japan as near-term beneficiaries of the global AI infrastructure build-out. Their importance in semiconductor manufacturing, critical minerals, and data-center supply chains is key, but BofA notes they still face challenges in converting these advantages into broader, economy-wide productivity gains.

Looking ahead, the analysis emphasizes that abundant and reliable energy is becoming a critical competitive advantage in AI. This trend gives an edge to countries like Canada, France, and the UAE as data-center capacity and computing workloads are set to expand significantly.