Investor optimism fuelled by massive spending on data centres, semiconductors, memory chips, and energy infrastructure.

Taiwan has become the world's fifth-largest stock market while South Korea narrows the gap with India amid a global rally in AI-linked technology stocks Investor optimism has been fuelled by massive spending on data centres, semiconductors, memory chips, and energy infrastructure. Samie Modak Mumbai Listen to This Article The global artificial intelligence (AI) boom is reshaping the pecking order of equity markets. Taiwan has overtaken India to become the world’s fifth-largest stock market. Meanwhile, chip giant Nvidia Corp — now valued at $5.2 trillion — is worth more than the combined market capitalisation of all listed Indian companies. At the same time, South Korea — home to technology heavyweights Samsung Electronics and SK Hynix — is fast closing in on India, with its market capitalisation now less than 8 per cent behind. According to Bloomberg data, Taiwan’s market capitalisation has surged 50 per cent this year to nearly $5 trillion. India, by contrast, has slipped to sixth place, with its market capitalisation declining 7 per cent year-to-date to $4.92 trillion amid weakness in equities and the rupee. South Korea, another major beneficiary of the AI trade, has seen its market capitalisation jump nearly 70 per cent this calendar year to $4.5 trillion, driven by a rally in semiconductor and AI-linked stocks. Investors are pouring billions into Korean and Taiwanese stocks on account of optimism around AI-led growth. Meanwhile, India is increasingly being viewed as a relative laggard in the AI-led rally, as it lacks meaningful representation in the global semiconductor and AI supply chain. So far this year, India has seen outflows of over $20 billion from foreign investors. “Since April 2025, foreign flows had rotated toward South Korea and Taiwan to play the AI trade, and Brazil on the back of the commodity rally, largely at the expense of India and partially China,” Elara Capital said in a note on Friday. Investor optimism has been fuelled by massive spending on data centres, semiconductors, memory chips, and energy infrastructure. Leading AI companies are estimated to spend nearly $1 trillion in capital expenditure over this year and next. Shares of Samsung Electronics and SK Hynix have rallied 2.4 times and three times, respectively, this year, while Taiwan Semiconductor Manufacturing Company (TSMC) has gained nearly 50 per cent, underscoring the scale of the AI-driven rally. “India is currently neither a pure AI play nor a high-growth outlier, which reduces its relative appeal versus markets like Korea, Taiwan, or even Brazil. In addition, foreign investors also complain that India is the only major emerging market that imposes a capital gains tax, which further impacts their returns — especially in an environment where the currency is also at risk of weakening further given an elevated current account deficit this year,” said Pratik Gupta, chief executive officer and co-head, Kotak Institutional Equities. Some experts caution that the AI trade is becoming increasingly crowded and vulnerable to sharp corrections. Markets such as South Korea and Taiwan are also becoming heavily concentrated, with Samsung Electronics and SK Hynix accounting for nearly half of South Korea’s market capitalisation, while TSMC alone represents almost 40 per cent of Taiwan’s market value. India, in contrast, is seen as a more diversified market. Reliance Industries, the country’s most valuable company, accounts for only about 4 per cent of India’s total market capitalisation. However, experts say that as long as momentum in AI-linked stocks remains strong, investors appear willing to overlook concentration risks and rotate capital from India to these markets. Don't miss the most important news and views of the day. Get them on our Telegram channel First Published: May 26 2026 | 5:50 PM IST

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