Why South Korea and Taiwan Stocks Are Surging as the AI Trade Moves to Asia

The rally also has a clear momentum component. A Reuters-linked report said chip stocks were boosted after Intel forecast second-quarter revenue above Wall Street expectations, adding to the market’s enthusiasm for AI-linked semiconductor demand ^[2]. In other words, investors are not just buying a long-term AI story; they are responding to earnings signals and forecasts that suggest demand remains strong.

Why Taiwan has become a global AI equity proxy

Taiwan’s market is heavily tied to the semiconductor supply chain, and TSMC is the central reason investors treat it as a direct AI beneficiary. Taipei Times reported that Taiwan’s stock-market value had climbed to nearly US$4.3 trillion, surpassing the UK earlier in April 2026, with the shift largely driven by gains in companies providing essential AI hardware ^[5].

Other reports have linked Taiwan’s record-setting run to TSMC’s earnings strength. Finimize reported that Taiwan’s main index surpassed 31,000 for the first time after TSMC posted a 35% rise in quarterly profit and projected about 30% revenue growth by 2026 in US dollar terms ^[10]. The broader point is simple: when investors want exposure to the physical buildout of AI, Taiwan is one of the most direct listed-market routes.

Why South Korea is drawing fresh capital

South Korea’s rally is more closely tied to memory chips and high-bandwidth memory. Business Insider reported that AI-driven demand for memory chips had supercharged South Korea’s market, while Goldman Sachs analysts still viewed Korean stocks as attractive despite the rally ^[8].

That matters because AI servers and accelerators require large amounts of high-performance memory, a segment associated with Samsung Electronics and SK Hynix. A South China Morning Post report said investors including Federated Hermes, M&G Investments and Invesco Asset Management had been overweight Korean shares and underweight Taiwan, citing Samsung and SK Hynix’s push into high-bandwidth memory, cheaper valuations and the fact that Taiwan’s rally had become crowded ^[16].

South Korea’s rally is also highly concentrated. Chosun reported that the combined market-cap share of Samsung Electronics and SK Hynix in the KOSPI reached a historic 38.2% as expectations for an AI-driven semiconductor supercycle lifted the market ^[15]. That concentration helps explain both the speed of the rally and the risks around it.

Why investors are shifting into Asian equities

The move into Asian equities is being driven by three overlapping forces.

First, Asia offers direct exposure to AI infrastructure. Reports describe TSMC, Samsung and SK Hynix as central to the global AI supply chain, making the region a way to invest in the hardware layer of AI rather than only in software platforms or end-user applications ^[1][12].

Second, investors see stronger earnings momentum. The Business Times reported that strong fundamentals and higher earnings-growth potential were reinforcing the move into Asian technology stocks, with TSMC, Samsung and SK Hynix already up between 8% and 16% early in 2026 ^[12].

Third, regional benchmarks themselves are being pulled higher by Korea and Taiwan. Kontan reported that the MSCI emerging Asia index jumped as much as 2% at the start of 2026, driven by South Korean and Taiwanese stocks, which together made up about two-fifths of the gauge ^[11]. When those two markets rally, they can lift the wider emerging-Asia allocation story.

Why geopolitical worries have not stopped the rally

The reports do not suggest that geopolitical or macro risks have disappeared. Instead, they show that investors have been willing to look through them while AI earnings expectations remain strong. The April 27 report said investors looked beyond stalled U.S.-Iran peace talks and inflation risks tied to possible energy-export disruptions because the AI trend was seen as powerful ^[2]. Another report said volatility around Middle East tensions still highlighted how optimistic investors remained toward AI ^[7].

That is an important distinction. The rally is not risk-free; it is a sign that, for now, investors view AI-related chip demand as the dominant market narrative.

The main risks: concentration, crowding and the chip cycle

The biggest weakness in the rally is also its biggest strength: concentration. Taiwan and South Korea are rising because a small group of semiconductor leaders is carrying a large share of market performance ^[5][15]. If AI capital spending slows, chip demand disappoints or earnings forecasts are revised lower, the same concentration that helped push markets up could amplify a reversal.

Crowding is another risk. The South China Morning Post report noted that some investors considered Taiwan crowded after its record-breaking rally and preferred South Korea partly because of cheaper valuations ^[16]. That does not mean Taiwan’s AI story is broken, but it does mean positioning can matter when expectations become stretched.

Trade and policy uncertainty also remain part of the backdrop. A Reuters-linked report in February said investors were assessing the global trade impact of renewed turbulence around the U.S. tariff regime even as AI-linked stocks in South Korea and Taiwan reached records ^[6].

Bottom line

South Korea and Taiwan are surging because the AI trade has moved deeper into the supply chain. Investors are buying the companies that manufacture the chips and memory behind AI infrastructure, especially TSMC, Samsung Electronics and SK Hynix ^[1][5][8]. The shift into Asian equities is being reinforced by earnings-growth expectations, direct AI hardware exposure and selective valuation appeal, particularly in South Korea ^[12][16].

The caveat is that this is still a narrow, semiconductor-led rally. If AI demand keeps translating into earnings, the trade can continue to attract capital; if the chip cycle turns or expectations reset, the markets most exposed to the boom could also feel the sharpest pullback.

EMERGING MARKETS-AI optimism powers South Korean, Taiwan shares to record highs ... Feb 24 (Reuters) - Artificial intelligence-linked stocks in South Korea and Taiwan rose on Tuesday, with both benchmarks scaling record highs as investors brushed aside over...