World’s largest fund managers seek out AI winners beyond US, focusing on Mukesh Ambani’s Reliance Industries

As the global excitement around artificial intelligence (AI) continues to grow, some of the world’s biggest money managers are looking beyond the US for the next wave of AI winners. With a three-fold surge in Nvidia Corp. and a 50% jump in a key US index for semiconductor manufacturers, investors are now turning their attention to emerging markets for better value and a wider range of options.

Goldman Sachs Group Inc.’s asset management arm is specifically targeting stakes in AI supply-chain component manufacturers, while JPMorgan Asset Management is focusing on traditional electronics manufacturers transitioning into AI leaders. Meanwhile, Morgan Stanley’s investment managers are placing their bets on companies in non-tech sectors that are reshaping their business models with AI.

AI stocks in emerging markets have already led a $1.9 trillion rebound this year, with Taiwanese and South Korean chip companies like Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. driving 90% of the gains. Despite this rally, most emerging-market AI stocks still offer better value compared to their US counterparts, with Asian AI giants typically valued between 12 and 19 times their projected earnings.

Analysts predict a 61% increase in earnings for emerging-market technology companies as a whole, outpacing the 20% rise expected for US peers. Companies like TSMC and Hon Hai Precision Industry Co. in Taiwan are already reaping the benefits of their early adoption of AI technology, outperforming their competitors and attracting investor interest.

While the trade is not without risks, such as potential AI selloffs echoing across the world, investors are increasingly turning to emerging markets for AI opportunities. With AI seen as an under-appreciated driver of growth in these markets, there is a lot of potential for investors to capitalize on the low-hanging fruit in the AI sector.