If you felt Taiwan sneaking ahead in the AI race, you were right. In the most recent quarter, the Taiex beat the Kospi by around 23 points, a spread not seen since the early 2000s. That comes on top of a year where both have jockeyed for the top slot globally. Right now, Taiwan's benchmark is up 72% in 2026, leading a Bloomberg lineup of more than 90 stock gauges, with Korea in the runner-up spot at roughly 65%.
Korea's headline makers, Samsung Electronics and SK Hynix, slumped between 19% and 33% over the three months through September after six quarters of gains powered by soaring memory prices and brisk analyst upgrades. Over the same stretch, Taiwan Semiconductor Manufacturing Co. added 2.9%, capping a sixth straight quarterly climb. Roughly one-tenth of Taiex constituents have already risen 100% or more this year, while the comparable figures come in at 4.1% on the Kospi and 5.7% on Japan's Nikkei 225.
Investors are giving Taiwan the nod because its AI footprint runs wider and its profit outlook looks sturdier. Earnings estimate upgrades for Taiwan have surpassed Korea's, a first since March 2025. In Bank of America's latest poll, around 40% of respondents reported an overweight position in Taiwan, while 25% did so for Korea.
Asked which market stands to benefit most as AI spending moves into its next chapter, 35% picked Taiwan and 5% chose Korea. The survey, conducted Sept. 4 to Sept. 10, covered 87 participants overseeing $211 billion in assets.
Societe Generale's team led by Rajat Agarwal is sticking with Taiwan over Korea, citing different earnings growth paths. They expect memory price gains to slow in coming quarters before returning to a more normal pattern in 2028 as Chinese rivals step up, and they note that Korea's July deleveraging has turned into a broader pullback from the market.
The AI trade is not distributed evenly across Asia, and the gap is widening. Market Briefs covers that divergence free every weekday.
In Singapore, M&G Investments portfolio manager Vikas Pershad said, "The distinction for us is not simply the amount of AI exposure, but the nature of the earnings supporting it." "Taiwan offers a broader and deeper opportunity set. Its earnings come from volume and that makes its earnings upgrades broader and stickier. Korea's earnings, in the near-term, are coming from price."
That lines up with how the markets are built. Taiwan gives investors entry points across chip design and fabrication, packaging, networking gear, and servers. Korea's leadership is far more concentrated in Samsung Electronics Co. and SK Hynix Inc., which could be a liability if the memory upcycle fades. Not everyone agrees, though: Citigroup's Peter Lee argued last week that demand tied to AI could tighten supply further and keep high-bandwidth memory pricing firm, saying investors should start buying names such as Samsung and SK Hynix given how much HBM he expects will be needed in 2027.
Valuations reflect the split. The Taiex trades near 18 times next year's projected earnings. The Kospi sits around 5.5 times, a mix of worries that memory may be nearing a peak and the long-discussed Korea discount.
Here is the punchline for regular investors. Taiwan's rally looks spread across many parts of the AI buildout and has been matched by broader earnings upgrades. Korea's run has leaned more on a couple of heavyweights and pricing power in memory. As Allspring's Gary Tan put it, "The next leg of upside for Taiwan stocks is likely to depend less on broad AI enthusiasm and more on local tech companies that remain exposed to genuine bottlenecks in the AI value chain."
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