Investing.com -- Japan offers the most attractive risk-adjusted exposure to the artificial intelligence investment cycle among major global equity markets, Barclays told clients in a note on Wednesday, arguing that Korea and Taiwan have become dangerously concentrated bets on a single part of the semiconductor value chain.

Analyst Ajay Rajadhyaksha noted that the AI trade has undergone a significant shift so far in 2026, with U.S. Big Tech lagging while semiconductor stocks surge.

The SOX index has risen 80% from its March lows, and several memory chipmakers have recently crossed the trillion-dollar threshold.

But Barclays cautioned that the most popular expressions of the trade carry hidden concentration risk.

Samsung and SK Hynix account for more than half of the Kospi, while TSMC alone represents 42% of Taiwan's TAIEX. "Korea is a memory trade. Taiwan is a foundry trade. Japan is an economy trade, with an AI kicker," Rajadhyaksha wrote.

The firm explained that Japan provides exposure across multiple layers of the AI supply chain, from semiconductor equipment makers such as Advantest and Tokyo Electron to infrastructure players like SoftBank, without the direct leverage to memory pricing cycles that defines Korea and Taiwan.

Barclays also highlighted Japan's structural reform story as an additional tailwind, pointing to improving corporate governance, rising dividends, accelerating share buybacks and the return of inflation after three decades of disinflation.

"The KOSPI and Taiex have given the better returns. The Nikkei is likely giving the better risk-reward now," Rajadhyaksha wrote.

The Nikkei 225 trades at 18-19 times forward earnings, compared to a near-perfection valuation in the U.S., Barclays noted.