How AI Is Transforming Emerging Markets: A New Core of Growth and Investment
Artificial intelligence is no longer exclusive to Silicon Valley. In 2025, it is the emerging markets that are becoming centers of innovation and profit in the AI sector. We’re not just talking about China, Taiwan, or South Korea global investors are turning their attention to companies from India, Malaysia, Latin America, and the Middle East. This marks a new phase of investment, where technology and data are not just tools but the foundation of economic power.
According to Bloomberg, six of the biggest contributors to this year’s growth in the emerging markets stock indexare Asian AI giants: Taiwan Semiconductor Manufacturing Co., Tencent, Alibaba, Samsung Electronics, SK Hynix, and Xiaomi. Together, they account for over 37% of the index’s gains.
Companies like Hon Hai Precision Industry (Foxconn) have bet heavily on AI servers, which have become “the main engine of growth.” This is not an exception but a new rule: the AI infrastructure in emerging markets is no longer lagging and in many cases, it’s exceeding expectations.
“This trend could last for the next 10-20 years,” said Alison Shimada, head of total emerging markets equity at AllSpring Global Investments. “The impact on local populations will be transformational.”
Investors Are Shifting Focus: AI Is Now the Core of the Portfolio
Asset managers such as AllSpring and GIB Asset Management are no longer just experimenting with AI they’re centering their portfolios around companies that live and breathe it. Investors are seeking not short-term profits but long-term structures capable of generating stable returns for decades.
“You can’t invest in emerging markets without having a bullish view on what this AI story could become in terms of corporate earnings,” explained Kunal Desai, portfolio manager at GIB Asset Management in London.
According to Desai, one-third of emerging markets’ profitability over the next few years will come from AI-linked stocks. This is not speculation funds have already started actively buying AI shares during market dips, signaling trust in the sector’s long-term fundamentals.
Geographies of Influence: Taiwan, South Korea, India, the Middle East
Taiwan and South Korea have been identified as “central driving forces” for market development over the next 2-3 years. But a disproportionate surge is also expected in China, India, Malaysia, Latin America, and the Gulf states, where AI is being rolled out in parallel with broader digital economy reforms.
“The growth of artificial intelligence and technology is creating a new level of long-term growth, especially in North Asia,” emphasized Xinchen Yu, emerging markets strategist at UBS Global Wealth Management.
This growth is not limited to startups large state-backed firms are also adapting their business models to the new AI reality, particularly in electric vehicles, energy, healthcare, and cloud computing.
A Surge in Confidence: AI Firms Are Beating Earnings Forecasts
The market is delivering. Analysts note that AI firms have consistently beaten earnings expectations since Q4 of 2023, unlike many other sectors, which have underperformed since early 2022.
This has significantly boosted institutional investor confidence, who now focus not only on AI’s potential but on the sector’s current earnings efficiency. The share of profits generated through AI is expected to keep growing.
“This sector is expected to grow rapidly and continue doing so going forward,” said Yang Je Lee, senior investment manager at Pictet Asset Management Ltd.
A new investment landscape is taking shape one where “second-tier” economies become key players. They’re no longer just about cheap labor or consumer markets they now offer ready-made ecosystems for AI development.
The AI sector is not just a trend. It’s an infrastructure-level technology reshaping the logic of the markets. And today, emerging markets are investing in it more aggressively than many advanced economies.
Investors have adapted. Funds have changed their priorities. Companies are building under a new paradigm. The next few years will determine who truly becomes a center of power in the emerging AI economy. But one thing is already clear: in this new game, the so-called “global periphery” may well become the core.
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