Stocks Outside the U.S. Are Joining the AI BoomBy Brett Eversole
Only one story really matters to investors today... Everything is AI. This didn't happen overnight. It has been a slow burn for years. More and more companies have been getting pulled into the AI build-out. The theme has gradually become larger and larger, and now it has effectively taken over the entire market. I've already covered why this is true of the U.S. But the trend is expanding... The interesting shift in 2026 is that AI is now more than just a U.S. phenomenon. When we look overseas, we see that just about everything that's working there has become a bet on AI, too. Today, I'll show what that means for you – the investor – because failing to understand this trend could leave you far less diversified than you expect...
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Many Foreign Markets Are Now a Hidden Bet on AIThe AI trend began in the U.S. with the hyperscalers and Nvidia. But now, that theme has expanded into other countries... The most obvious example is South Korea. The country is home to two of the world's leading memory-chip companies – Samsung and SK Hynix. Those two stocks are up roughly 360% and 530%, respectively, since the middle of 2025. After those rallies, they make up roughly half of the entire South Korean stock market. And last month, thanks to AI chip demand, Korea's semiconductor exports more than tripled compared with a year ago, hitting a record high of $60.3 billion. In other words, South Korea has become one of the most direct bets on AI you can find. Japanese stocks are on a similar, though less extreme, path. The benchmark Nikkei 225 Index has been hitting all-time highs for most of the past year. It has doubled since hitting a tariff-induced bottom in April 2025. The cause of its massive rally? Well, just look at the composition of the index...
Traditionally, folks think of Japan as a manufacturing economy. But today, semiconductors and tech account for more than a third of the Nikkei. That makes it much closer to the Nasdaq Composite Index than most investors would expect. Moreover, this shift explains the index's strong rally... It's AI. We see the same story when we look broadly at emerging markets – which is something I never thought I'd see in my career... When I started in this business in 2010, emerging markets hadn't developed their own tech sectors yet. They didn't have globally cutting-edge businesses. So they all looked the same. Each was filled with "old guard" investments like banks, telecoms, energy companies, and insurance firms. In fact, these markets looked a lot like Brazil does right now. Here is how the iShares MSCI Brazil Fund (EWZ) breaks down by industry...
As you can see, it's full of "old school" industries. No tech. No semiconductors. Nothing you'd expect to soar thanks to AI. Now, here's the industry breakdown for the broad iShares MSCI Emerging Markets Fund (EEM), which covers 24 countries...
This is nothing like Brazil's market. Semiconductors, tech, and Internet stocks make up about 45% of the fund. That's thanks to big companies in South Korea and Taiwan. Even emerging markets have become a bet on AI. Your Portfolio May Be Less Diversified Than You ThinkThe crazy part is just how extreme the link between these markets and technology is right now. To see it, I ran a simple correlation analysis between EEM, EWZ, and the tech-focused Nasdaq 100 Index, using data from the past year. This analysis tells us whether two investments move together or not. It gives us a "correlation coefficient," a score between negative 1 and 1. A reading of 1 means the investments move in lockstep. A reading of zero means they have nothing to do with each other. And a reading of negative 1 means they move in opposite directions. As you probably expect, EWZ and the Nasdaq 100 are barely correlated at all. Their correlation coefficient was just 0.37 over the past year. In the past, we would have expected to see a similar result for EEM. But we know this emerging market fund has become a backdoor bet on AI. And over the past year, its correlation coefficient with the Nasdaq 100 is a staggering 0.83. That means U.S. tech stocks are practically moving in lockstep with emerging markets. That's another thing I never thought I'd see in my career. It's happening because there's a single overarching trend driving everything, all around the world... AI. I'm not saying this is a good thing or a bad thing. But it is a reality. You see, investors generally look outside the U.S. because they want diversification. They want assets that could zig if U.S. stocks zag. Today, we're not getting that in many foreign markets. Emerging markets and much of Asia are directly linked to the AI trade. Make sure you understand that before putting money to work. Good investing, Brett Eversole P.S. Right now, AI is nearing a major tipping point. But if you've been on board this trend so far, you might be holding the wrong stocks for what's coming next... because this shift will completely change the winners and losers in this market. That's why I've identified six AI investments that are positioned to soar in this new phase.
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