For UK investors who feel they have missed the spectacular rally in the US ‘Magnificent Seven’ stocks and perhaps worry about US valuations per se, there is a sea of attractive opportunities elsewhere. Outside the US, investors can gain exposure to AI through semiconductor manufacturing, memory chips, industrial automation, internet platforms, enterprise software and digital infrastructure—often at considerably lower valuations.
Many of these companies generate substantial free cash flow, have dominant competitive positions and trade on more modest earnings multiples than their US counterparts. Morningstar analysts continue to identify several non-US AI beneficiaries as undervalued despite the long-term structural AI opportunity.
10 leading non-US AI opportunities
| Company | Exchange | AI exposure | Investment case |
| Taiwan Semiconductor Manufacturing Company | Taiwan | AI chip manufacturing | World’s leading advanced foundry |
| ASML | Amsterdam | EUV lithography | Monopoly supplier to advanced chipmakers |
| SK Hynix | Seoul | HBM memory | Leader in AI memory chips |
| Samsung Electronics | Seoul | AI memory & foundry | Diversified semiconductor giant |
| Tencent | Hong Kong | AI cloud & software | Huge AI ecosystem and cash generation |
| Alibaba | Hong Kong | AI cloud | China’s leading AI cloud platform |
| SAP | Frankfurt | Enterprise AI | AI embedded across business software |
| Schneider Electric | Paris | Datacentre infrastructure | Power systems benefiting from AI investment |
| Siemens | Frankfurt | Industrial AI | Factory automation and digital twins |
| RELX | London | AI-enabled data analytics | High-quality recurring information business |
Financial comparison (approximate consensus)
| Company | Forward P/E | ROE | Operating margin | FCF profile | 1yr return | 5yr return |
| TSMC | 20-23x | 30%+ | 45%+ | Excellent | Strong | Outstanding |
| ASML | 28-32x | 45%+ | 32% | Excellent | Moderate | Outstanding |
| SK Hynix | 10-13x | 20%+ | 30%+ | Very strong | Very strong | Outstanding |
| Samsung | 12-15x | 10-15% | 15% | Excellent | Moderate | Positive |
| Tencent | 18-22x | 20%+ | 30% | Excellent | Strong | Strong |
| Alibaba | 10-13x | 12%+ | 15% | Excellent | Strong | Mixed |
| SAP | 35-40x | 15%+ | 28% | Strong | Strong | Excellent |
| Schneider Electric | 28-32x | 18%+ | 18% | Strong | Strong | Excellent |
| Siemens | 20-23x | 18%+ | 16% | Strong | Strong | Very good |
| RELX | 26-30x | 50%+ | 35%+ | Excellent | Good | Excellent |
*PE multiple will depend on which forecasts are used and share price volatility
Individual analysis
TSMC (NYSE:TSM)
Why own it?
Every major AI chip designer—including Nvidia, AMD and Broadcom—depends on TSMC’s manufacturing technology. Most easily accessible through NYSE-listed ADRs.
Management view
Management continues to forecast AI-related revenue growing significantly faster than the overall semiconductor market.
Analyst view
Many analysts view TSMC as the ‘picks and shovels’ play on AI because it benefits regardless of which chip designer wins. Morningstar also considers the shares attractively valued.
Advantages
- Near-monopoly in leading-edge manufacturing
- Exceptional profitability
- Huge free cash flow
Risks
- Taiwan geopolitical risk
- Semiconductor cycle
Consensus upside
Around 15-25% over 12 months.
ASML (AMS:ASML)
The only supplier capable of manufacturing extreme ultraviolet (EUV) lithography machines essential for cutting-edge AI chips.
Pros
- Virtual monopoly
- Long order backlog
- Exceptional margins
Risks
- Export restrictions
- Cyclical capital spending
Consensus upside
15-20%
SK Hynix (KRX:000660)
The world’s leader in High Bandwidth Memory (HBM), arguably the most important memory technology powering AI accelerators. Most easily accessible through Nasdaq-listed ADRs (launch 10 July under NASDAQ:SKHY ticker).
SK Hynix’s Nasdaq debut: A simpler route into one of the world’s hottest AI chip stocks?
Pros
- Explosive AI demand
- Improving margins
- Attractive valuation
Risks
- Memory price volatility
Consensus upside
20-30%
Samsung Electronics (KRX:005930)
Offers exposure to AI memory, advanced chip manufacturing, smartphones and consumer electronics. Most easily accessible through Nasdaq-listed GDRs (launch 10 July).
Most easily accessible through London-listed GDRs under ticker LON:BC94.
Samsung Electronics Q2 2026: Record profits, but investors wanted even more
Pros
- Cheap valuation
- Huge cash reserves
- Multiple AI businesses
Risks
- Execution versus SK Hynix
- Memory cycle
Tencent (HKG:0700)
China’s largest internet ecosystem is embedding AI throughout gaming, advertising, payments and cloud computing. Increasing AI investment while maintaining disciplined capital allocation.
Pros
- Huge free cash flow
- Share buybacks
- Attractive valuation
Risks
- Chinese regulation
Alibaba (HKG:9988)
Its cloud division is becoming one of China’s biggest AI infrastructure providers. Most easily accessible through NYSE-listed ADRs under ticker NYSE:BABA.
Pros
- AI cloud leadership
- Low valuation
- Net cash balance sheet
Risks
- Competitive cloud market
- Chinese economy
SAP (ETR:SAP)
Europe’s software champion is embedding generative AI throughout its enterprise applications.
Pros
- Sticky customer base
- Recurring revenue
- Cloud migration
Risks
- Premium valuation
Schneider Electric (EPA:SU)
AI data centres require enormous power infrastructure. Schneider is one of the world’s leading providers of electrical equipment and energy management systems.
Pros
- Structural AI infrastructure demand
- Excellent execution
- Strong cash generation
Risks
- Industrial slowdown
Siemens (ETR:SIE)
Industrial AI, digital twins and factory automation should provide years of growth.
Pros
- Diversified earnings
- Digitalisation exposure
- Strong balance sheet
Risks
- Global manufacturing weakness
RELX (LON:REL)
Less obvious than semiconductor stocks but increasingly using AI across legal, scientific and risk analytics products.
Morningstar argues markets may be underestimating the resilience of high-quality information providers with deep proprietary datasets.
Pros
- High recurring revenues
- Excellent margins
- Consistent cash generation
Risks
- Slower growth than semiconductor names
Which look most attractive?
| Investor objective | Best ideas |
| Best value | Alibaba, SK Hynix, Samsung |
| Highest quality | TSMC, ASML |
| Most defensive | RELX, Schneider Electric |
| Fastest earnings growth | SK Hynix, TSMC |
| Best AI infrastructure | ASML, Schneider, Siemens |
| Best long-term compounders | TSMC, ASML, SAP, Tencent |
Investor verdict
Rather than trying to identify the next AI application winner, UK investors may achieve a better balance of risk and reward by owning the companies that provide the essential infrastructure behind AI, often at considerably lower valuations to the US. TSMC, ASML and SK Hynix occupy exceptionally strong competitive positions and continue to benefit from rising AI capital expenditure regardless of which software platform ultimately dominates.
For investors seeking lower valuations, Tencent and Alibaba offer meaningful AI exposure alongside substantial free cash flow generation, while Schneider Electric, Siemens and RELX provide diversified exposure to the long-term digitalisation trend with more defensive business models.
Overall, TSMC stands out as the strongest combination of AI exposure, profitability, free cash flow and valuation, with SK Hynix offering the greatest cyclical upside and ASML remaining one of the highest-quality technology businesses outside the US.
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