One of the smallest countries on Earth has become the nerve center of the artificial intelligence boom.

South Korea – a nation nearly 1% the size of the U.S. and roughly as big as the state of Indiana – has been the uncontested top gainer of 2026.

The iShares MSCI South Korea ETF (EWY) has rallied 112% year-to-date through June 16, delivering 11 times the return of the S&P 500 (SPY), according to data from CountryETFTracker.

The answer to why South Korea is such a big beneficiary of the AI buildout fits on a memory chip.

South Korea sits at the heart of the global supply chain for high-bandwidth memory, or HBM — the specialized stacked DRAM that every Nvidia Corp. (NVDA) AI accelerator depends on to feed its compute. Two Seoul-listed giants, SK Hynix Inc. and Samsung Electronics Co., manufacture the overwhelming majority of the world's HBM. As demand for AI infrastructure exploded through 2026, so did their order books, their pricing power, and their share prices.

The numbers inside EWY tell the whole story. SK Hynix, the fund's largest position at 23.17% of assets, has surged 266.64% year-to-date. Samsung, a near-equal 23.11% weight, is up 186.65%. Together the two stocks make up roughly 46% of the entire ETF — and account for more than half of EWY's entire move this year.

The Memory Super-Cycle

Memory has become one of the thinnest bottlenecks in the AI trade. Every AI training cluster needs vast stacks of it sitting right next to the GPU, and the manufacturing process is too complex and capital-intensive for supply to catch up quickly. SK Hynix has been the lead HBM supplier for Nvidia's flagship accelerators, with Samsung racing to ramp and qualify its own production. With capacity effectively sold out and prices climbing, the two Korean players have captured margins that memory makers haven't seen in a decade.

The same super-cycle lifting Korea has rippled across the Pacific. Micron Technology Inc. (MU), the only U.S.-based HBM producer, has become the most direct American proxy for the trade. Beyond high-bandwidth memory, tightening conditions across NAND and conventional DRAM have pulled in Western Digital Corp. (WDC) and SanDisk Corp. (SNDK), as AI data centers soak up storage capacity alongside compute.

SanDisk, Western Digital and Micron have soared 760%, 290% and 260% year-to-date, respectively, ranking as the three best-performing stocks in the S&P 500.

Yet the broader U.S. market has badly trailed South Korea for one simple reason: weighting. These memory names are rounding errors inside a 500-stock index, whereas Samsung and SK Hynix alone command nearly half of EWY — about 46% of the fund combined.

Cheap, Despite The Doubling

Here's what makes the South Korea rally genuinely unusual: even after a 100%-plus run, the valuations still look cheap. SK Hynix trades at just 6.5 times forward earnings and Samsung at 5.9 times — both carrying PEG ratios below 0.10, a sign the market is pricing in only a fraction of expected growth.

And the growth pipeline is enormous. Consensus estimates point to forward revenue rising 237.28% year-over-year for SK Hynix and 97.38% for Samsung, with two-year revenue CAGRs of 123.16% and 60.26%, respectively.

South Korea Stands Alone

EWY's 111.80% gain isn't just the best in Asia — it's the best of any single-country ETF tracked by CountryETFTracker, nearly double Taiwan's iShares MSCI Taiwan ETF (EWT) at 63.37%, and more than 11 times SPY's 10.03%. Over the past 12 months, EWY is up 208.75%.

In a year defined by the AI buildout, the market has voted with its capital: the most concentrated bet on the picks-and-shovels of artificial intelligence isn't in Silicon Valley. It's in Seoul.