Where investors may find the next ‘big wave’ for AI trade

The next massive gains in artificial intelligence may come from thousands of miles away.

Tim Urbanowicz, chief investment strategist at Innovator from Goldman Sachs Asset Management, is urging investors to look beyond their backyards to the emerging markets.

“[It’s] where a lot of the big money can be made on the AI trade,” he told CNBC’s “ETF Edge” this week – calling it “the next big wave.”

Urbanowicz is particularly bullish on Taiwan and South Korea when it comes to the AI build-out. He notes they are a big part of the broad iShares MSCI Emerging Markets ETF, which is up 26% year to date as of Thursday’s close.

“These are major players in the AI trade and the AI space where valuations really haven’t gone up as much as they have in the U.S.” he said. “There’s still a lot of runway in our view to provide outsized gains with this AI trade.”

The iShares MSCI Taiwan ETF is up almost 67% so far this year while the iShares MSCI South Korea ETF market has risen 109%, as of Thursday’s U.S. close. Both Taiwan- and South Korea-focused ETFs hold several AI memory-related chip names.

In a special note to CNBC, Urbanowicz highlighted the actively managed Goldman Sachs ActiveBeta Emerging Markets Equity ETF as a way for investors to gain exposure to potential AI-driven gains in emerging markets.

Yet, Urbanowicz isn’t abandoning the domestic trade when it comes to AI.

“We think the U.S. is still positioned for success,” he said.