As the global artificial intelligence (AI) boom continues to reshape industries, emerging-market (EM) investment funds are making strategic shifts to capitalize on new growth opportunities. According to recent analysis from Citigroup strategists, EM stocks with AI exposure have outperformed even the high-flying “Magnificent Seven” U.S. tech giants, signaling a transformative trend in global investing.
AI Momentum Drives Emerging Market Outperformance
The “Magnificent Seven” – including Apple, Microsoft, Nvidia, Meta Platforms, Alphabet, Amazon, and Tesla – have long dominated headlines and investment flows. However, Citigroup’s latest data shows that select AI-linked stocks in emerging markets are delivering superior returns, drawing increased attention from global asset managers.
This shift reflects a broader recognition of how emerging economies are becoming integral players in the global AI race. Countries such as Taiwan, South Korea, India, and Brazil are seeing an influx of investment in AI infrastructure, semiconductors, data centers, and machine learning applications. These developments are enabling local companies to tap into the AI value chain in meaningful ways.
Emerging-Market Funds Adapt to New Tech Landscape
In response, portfolio managers of EM funds are rebalancing holdings to include companies with direct or indirect AI exposure. These include chip manufacturers, cloud service providers, robotics firms, and software companies that are embedding AI capabilities into their products and services.
“Investors are increasingly looking beyond traditional tech giants and turning their focus to under-the-radar companies in Asia and Latin America that are making big AI strides,” said a Citigroup strategist. “In many cases, these firms offer better growth potential at more attractive valuations.”
Key Markets Benefiting from AI Integration
- Taiwan continues to lead with dominant players like TSMC, a key supplier to global AI chipmakers.
- India is seeing rapid expansion in AI-driven IT services and enterprise software.
- South Korea remains strong in semiconductors and smart devices.
- Brazil and Mexico are emerging as new hubs for AI innovation in agritech and fintech.
These regions are also benefiting from supportive government policies, improving digital infrastructure, and an expanding talent pool of data scientists and engineers.
Investment Outlook: AI-Driven Growth in EM Equities
The outperformance of AI-exposed EM stocks is prompting analysts to revise their growth projections for emerging markets. As companies continue to integrate AI across verticals, revenue and earnings potential are expected to rise significantly. Moreover, the AI wave offers a structural growth story that could decouple EM equities from traditional macro risks like commodity prices or interest rates.
Conclusion
The AI boom is not just a U.S.-centric story anymore. Emerging markets are proving they have the innovation capacity and industrial base to compete in the next era of technology. As EM funds reposition to capture these gains, investors may find attractive opportunities in markets once considered high-risk but now increasingly seen as high-reward. With AI reshaping global investment narratives, staying ahead means looking beyond the usual tech giants—and into the rising stars of the emerging world.