Despite the rally, emerging-market AI stocks still offer better value than their US counterparts. While Nvidia trades at 35 times its projected earnings, Asian AI giants are typically valued between 12 and 19 times. Analysts predict a 61% increase in earnings for emerging-market tech companies, compared to a 20% rise for US peers. The early adoption of AI technology has put these companies far ahead of their competitors. However, the trade is not without risks, as emerging markets are closely tied to the US, meaning an AI selloff could have global repercussions.
Key takeaways:
- Major money managers are looking beyond the US for the next big winners in artificial intelligence (AI), with emerging markets offering better value and a wider range of options.
- AI stocks are leading a $1.9 trillion rebound in emerging markets this year, with Taiwanese and South Korean chip companies accounting for 90% of the gains.
- Emerging-market AI stocks offer better value than their US counterparts, with Asian AI giants typically valued between 12 and 19 times their projected earnings, compared to Nvidia's 35 times.
- Established businesses that are moving into AI, such as Alibaba's cloud partnership with Saudi Telecom Co. and Reliance Industries' chatGPT-style model, are attracting fresh investor interest.