The next phase of the AI trade could belong to this market, Barclays says

Barclays tells clients the next phase of the AI trade may favor Japan, citing its diversified exposure across AI supply-chain layers (equipment makers, infrastructure) and an improving corporate-governance backdrop. The bank warned Korea and Taiwan are concentrated bets—Samsung and SK Hynix dominate the Kospi and TSMC represents a large share of Taiwan—leaving them exposed to memory/foundry cycles. The note highlights the semiconductor index’s sharp rally (SOX +80% from March lows) but says Japan’s 18–19x forward earnings and structural reforms (higher dividends, buybacks, inflation return) offer a superior risk-reward. Market impact: investors may reweight regional exposure within the AI trade toward Japanese equities, reducing concentration risk tied to memory/foundry players in Korea and Taiwan.