AI Globalization Trade: The End or a New Beginning of North American Tech Hegemony?

From Mag 7 to Global AI Investment: A New Capital Narrative Is Taking Shape

When the market talks about AI trading, the past two years have almost been synonymous with the "Magnificent Seven" (Mag 7) or the Nasdaq 100. However, data from 2025 to 2026 shows that AI investment has rapidly evolved into a truly global phenomenon. A comparison chart from JPMorgan analyst Michael Cembalest clearly reveals: since the beginning of 2024, the Chinese AI stock basket has been nearly neck-and-neck with the S&P 500 AI basket; emerging markets overall have performed on par with the Nasdaq 100. South Korea and Taiwan have surged by nearly 180% and over 100% respectively, far exceeding the U.S. stock market's gains over the same period (S&P 500 up 25%, Nasdaq 100 up 34%).

These markets have not risen broadly but are highly concentrated in the core suppliers of AI infrastructure: SK Hynix, Samsung, and TSMC each account for over 20% of their respective national stock markets. This is not the diffusion of a broad bull market but a clear value chain revaluation.

Why Is This Happening? — The Physical Nature of the AI Supply Chain Determines Capital Flows

The essence of the AI industry is "algorithms + computing power + data." Among these, the physical carrier of computing power—semiconductors—is highly concentrated outside the United States. TSMC dominates global advanced process manufacturing, South Korea leads in HBM (High Bandwidth Memory), and China is rapidly catching up in AI applications and some chip design. As AI moves from concept to large-scale infrastructure build-out, hardware procurement surges, and the performance and valuations of these non-U.S. suppliers naturally rise accordingly.

At the same time, U.S. AI giants themselves have already experienced multiple rounds of stock price increases, with valuations at historical highs. Capital, being profit-seeking, begins to look for relative value gaps and new growth stories. Although semiconductor companies in South Korea and Taiwan have also benefited from AI, they previously had larger valuation discounts; once earnings materialize, their gains are more dramatic.

Who Will Benefit? — Diverse Winners and Potential Losers

• Beneficiaries:
• The semiconductor supply chains of South Korea and Taiwan: Not only Samsung, TSMC, and SK Hynix, but also related equipment, materials, and design service companies. These enterprises have become the "shovel sellers" for AI infrastructure, with high order visibility.
• Investors with globally diversified portfolios: Institutions and individuals allocating to non-U.S. markets finally enjoy the long-awaited opportunity to outperform U.S. stocks.
• Emerging market countries: Stock market gains bring a wealth effect, potentially increasing household stock ownership rates (currently about 62% of U.S. households hold stocks, while many emerging markets are below 20%), which benefits the long-term development of their capital markets.Those Under Pressure:
• Investors purely betting on U.S. AI giants: Relative returns may lag, but absolute returns remain substantial. However, if valuations of U.S. AI giants correct, losses will be greater.
• Retail investors lacking global allocation capabilities: Prone to buying high and panic selling amid hotspot shifts (e.g., the mentioned single-day drops of 14% in South Korea and 7% in Taiwan).
• The narrative of U.S. tech hegemony: The rise of global AI trading challenges the "U.S.-only" narrative, but has not yet shaken its technological dominance.

Implications for Investors: Asset Allocation Needs Reglobalization

• Over the past decade, U.S. stocks were the only market worth owning. Now the situation has changed. The globalization of AI trading means investors' opportunity set has expanded, but risks have also increased:
• Concentration risk: South Korean and Taiwanese stock markets rely too heavily on a few semiconductor giants. Once the industry cycle reverses or technology pathways change, volatility is extreme.
• Geopolitical risk: Cross-strait tensions, U.S.-China tech decoupling, and South Korean political uncertainty can all disrupt investment logic.
• Currency risk: Capital denominated in U.S. dollars must account for fluctuations in the Korean won and New Taiwan dollar.

Savvy investors should view global AI stocks as a portfolio diversified across different risk factors, rather than a simple replacement for U.S. tech stocks.

Significance for the Supply Chain and Regional Competition

North American semiconductor giants (e.g., Nvidia) remain the "brain" of the AI ecosystem, but the outsourcing of manufacturing prevents them from capturing all value. The globalization of the supply chain forces the U.S. to reassess the actual effectiveness of its "semiconductor localization" policy (CHIPS Act). If the U.S. cannot build sufficiently advanced packaging and memory capacity domestically, profit distribution in the global AI supply chain will continue to tilt toward East Asia.

Furthermore, AI is "flattening" economic opportunities—as author Ben Carlson puts it. Regions like Southeast Asia and India, with vast pools of engineering talent and data markets, may become hotbeds for AI application deployment, attracting more capital. North America, as the source of innovation, will face competitive pressure after technology diffusion.

Long-Term Trend Outlook (3-5 Years)

1. AI infrastructure shifts from capital-intensive to intelligence-intensive: As computing costs decline, AI applications will explode, and value may shift from hardware to software and services. At that point, the algorithmic and platform advantages of the U.S. could re-emerge. 2. Global semiconductor capacity rebalancing: After TSMC’s factories in Arizona and Samsung’s in Texas begin production, North America will gain a larger share of advanced manufacturing, but East Asia will still dominate. 3. Financial deepening in emerging markets: Wealth created by AI may boost household stock ownership rates in more countries, forming a virtuous cycle. However, a market crash could dampen confidence. 4. Geopolitical risk normalization: Investors must incorporate political factors into AI stock pricing models, rather than focusing solely on technical aspects.In summary, the globalization of AI trading is a natural result of technology diffusion and an inevitable choice for global capital seeking diversification. North America no longer exclusively enjoys the AI dividend, but it still has the capacity to maintain leadership through innovation and its capital ecosystem. The true winners will be those enterprises and investors who can balance global deployment with local advantages.