RJ Kesari News Desk: The global stock market is witnessing an Artificial Intelligence (AI)-driven transformation, with AI-focused companies creating massive wealth for investors. While US technology giants continue to dominate the AI revolution, major Asian markets like India, China, and Hong Kong are struggling to keep pace.

According to a recent Bloomberg report, the absence of dominant AI-driven companies has weakened the market influence of top-listed firms in these countries, allowing AI leaders in Taiwan and South Korea to outperform significantly.

Top Companies Lose Their Grip on Market Capitalization

The report highlights a notable decline in the dominance of the largest companies across several Asian markets.

• In China, the top 10 listed companies now account for around 19% of the total market capitalization, down from 26% a year ago.
• In India, the share of the top 10 companies has dropped from 22% to nearly 19%.
• Hong Kong remains the least concentrated market, with the top companies' share slipping from 10% to 9.8%.

The declining concentration reflects the lack of major AI champions capable of driving broader market gains.

Taiwan and South Korea Emerging as AI Powerhouses

Unlike India and China, Taiwan and South Korea have benefited enormously from companies deeply integrated into the global AI supply chain.

Taiwan's benchmark index has surged by 54%, largely fueled by the remarkable growth of Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's largest chipmakers.

Meanwhile, South Korea's Kospi Index has nearly doubled, supported by AI memory leaders SK Hynix and Samsung Electronics, which have become critical suppliers for next-generation AI infrastructure.

Today, the top 10 companies account for nearly 65% of South Korea's total market capitalization, almost double compared to last year. In Taiwan, the share of the top 10 companies has increased from 49% to 56%, reflecting the growing dominance of AI-driven businesses.

Why India Is Falling Behind in the AI Race

India's stock market continues to be led by traditional business giants such as Reliance Industries, HDFC Bank, Tata Consultancy Services (TCS), and Infosys.

While these companies remain financially strong, most operate in sectors that are not directly benefiting from the explosive AI hardware boom. India's leading IT firms are primarily focused on software services, a segment that analysts believe could face disruption as AI automation expands.

The Nifty 50 Index has also struggled this year, reflecting the absence of a large, globally dominant AI-focused company capable of driving market momentum.

Experts Believe Diversification Is Both Strength and Weakness

According to Charu Chanana, Chief Investment Strategist at Saxo Markets Singapore, AI-driven market concentration varies across Asia.

She believes markets like Taiwan and South Korea are seeing higher concentration because AI and semiconductor companies are becoming significantly more valuable. However, in India, China, and Hong Kong, the absence of a clear AI market leader has reduced the dominance of top companies.

At the same time, Siddharth Vora, Fund Manager and Head of Asset Management at PL Capital, points out that India's diversified market structure could prove beneficial if global AI valuations become overheated. Multiple sectors contributing to corporate earnings may offer greater stability during any future market correction.

China Investing Aggressively in AI Despite Challenges

Although China currently trails the US in AI leadership, the country is rapidly increasing investments in the sector.

Chinese technology firms and policymakers continue to push AI development through semiconductor manufacturing, intelligent processors, and advanced optical networking technologies.

Some of China's strongest-performing stocks this year include:

• Cambricon Technologies (AI processors)
• SMIC (Semiconductor Manufacturing)
• Yangtze Optical Fiber & Cable (Optical communication infrastructure)

These companies are expected to play a key role in China's long-term AI ambitions.