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

While the United States and China continue to dominate the global artificial intelligence landscape, a new report from Bank of America has identified a handful of nations emerging as the strongest contenders to benefit from the next phase of AI development. The analysis suggests that rather than challenging the two leaders directly, other economies are strategically positioning themselves to capture growth through key niches.

A New Tier of AI Leaders

According to Bank of America, the AI sector is increasingly concentrated around the U.S., which maintains a lead in private investment, advanced chips, and computing infrastructure, and China, which leverages its manufacturing scale, lower energy costs, and control over processed critical minerals.

In this environment, other countries are carving out distinct roles. The report highlights that the most successful strategies focus on strengthening semiconductor supply chains, attracting data-center investment, and driving the broad adoption of AI technologies across their domestic economies.

South Korea and UAE Lead the Pack

Bank of America named South Korea as the strongest overall AI contender beyond the U.S. and China for both the short and long term. The country's strengths lie in its combination of semiconductor manufacturing exposure, rapidly growing AI adoption, supportive government policies, and an ability to translate AI deployment into long-term productivity gains.

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The United Arab Emirates was identified as another leading contender, propelled by 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. A strong second tier of AI leaders includes Canada, Germany, Israel, the Netherlands, Singapore, Switzerland, and the United Kingdom.

Long-Term Challengers and Niche Players

Among emerging markets, BofA highlighted India as the clearest long-term challenger. While it currently lacks the semiconductor manufacturing base of its Asian peers, the report notes India is already one of the largest AI adoption markets with diffusion levels comparable to some advanced economies. The report also identified Taiwan, Australia, and Japan as near-term beneficiaries of the AI infrastructure build-out due to their roles in semiconductors, critical minerals, and data-center supply chains.

BofA's analysis also emphasized that abundant and reliable energy is becoming a critical competitive advantage. This gives an edge to countries like Canada, France, and the UAE as the demand for computing power and data-center capacity continues to expand globally.