US stocks had a stellar 2025, however international markets stole the present.
A significant index monitoring stocks exterior the US, the MSCI All Country World ex-USA, gained 29.2% in 2025, handily outpacing the S&P 500’s acquire of 16.39%.
The synthetic intelligence increase has benefited markets in Asia, the place tech corporations and chipmakers have seen surges in demand. In Europe, markets acquired a enhance from plans for presidency spending on protection and improved prospects for financial development.
A weaker US dollar additionally offered a tailwind for international stocks. When the greenback weakens and different currencies strengthen, investments denominated in these currencies develop into extra useful when transformed again into {dollars}.
The US greenback index, which measures the greenback’s power towards six main currencies, fell by roughly 9.4% in 2025, its worst yr since 2017.
Heading into 2025, US inventory valuations have been already comparatively costly in comparison with the remainder of the world, creating an incentive for traders to search for returns in several markets.
“A lot of things went right for international stocks in 2025,” Michael Reynolds, vp of funding technique at Glenmede, informed NCS.
“After a couple years of lackluster fundamentals, foreign equities put together a strong year of earnings growth,” Reynolds mentioned. “This was highlighted by fiscal stimulus in Europe and AI-related growth in Asia.”
Markets in Asia have been using the wave of AI enthusiasm.
Tech corporations and chipmakers in South Korea, Taiwan, Japan and China all benefited final yr from investor curiosity in AI.
South Korea’s Kospi index soared nearly 76% in 2025 and posted its finest yr since 1999. Japan’s Nikkei 225 gained 26%, lifted by good points in tech corporations and chipmakers.
In Japan, shares of reminiscence chip maker Kioxia surged 536%. And in South Korea, shares of tech large Samsung surged nearly 130%.
“The AI trade has broadened materially over the past year,” mentioned Arun Sai, senior multi-asset strategist at Pictet Asset Management. “That optimism has increasingly been priced in beyond the US, extending globally, particularly into markets such as Korea and Japan.”
In Taiwan, shares in Taiwan Semiconductor Manufacturing Company (TSM) gained 46.54% final yr and hit document highs. Meanwhile, shares of China-based Alibaba (BABA) soared 75.81% as the corporate embraced AI and launched its own chatbot.
Growth and protection
Stocks in Europe rallied in early 2025 because the German authorities enacted historic reforms to boost spending on defense. European protection stocks rallied final yr, with German producer Rheinmetall gaining 154%.
Meanwhile, bettering outlooks for the economies in Greece, Spain and Poland benefited these nations’ markets. European banks like Santander (SAN) and Deutsche Bank (DB) additionally had standout years, every rising about 126% and serving to raise markets.
Spain’s benchmark IBEX 35 index gained 49% and had its finest yr since 1993. Italy’s FTSE MIB gained nearly 32% and had its finest yr since 1998. Germany’s DAX climbed 23% and Greece’s ATHEX Composite gained 44%, every posting their finest yr since 2019. Poland’s WIG index rose 47%.
“In a year when the falling dollar sent investors scrambling for global exposure, Poland offered a unique mix of growth and value,” mentioned David Russell, international head of market technique at TradeStation.
“Greece is finally recovering from a decade-long debt crisis,” Russell mentioned. “The country recovered its investment-grade rating at Moody’s and enjoyed a tourism boom. It’s a classic comeback story following a period of bad loans and low multiples.”
The UK’s benchmark FTSE 100 index gained 21.51% and had its finest yr since 2009. The index then kicked off 2026 on a sturdy be aware, briefly rising above a document excessive 10,000 factors on Friday for the primary time ever.
For US traders, analysts say the greenback will probably be key to gauge international stocks’ returns.
“If the dollar continues to weaken, foreign stocks may continue to have the wind at their back,” Reynolds at Glenmede mentioned.
While international markets had a yr of outperformance, some traders say the basics nonetheless help the United States.
“We still favor the US first and international second,” mentioned Sameer Samana, head of worldwide equities and actual belongings at Wells Fargo Investment Institute. “We feel the dollar will stabilize, which will help to dampen the advantage for emerging market equities.”
Wall Street remains optimistic in regards to the outlook for US stocks as company income have been resilient, and there’s optimism that AI will proceed to drive earnings development. Still, traders final yr seemed abroad to diversify portfolios amid heightened uncertainty, and international — each developed and rising — markets proved to be a sturdy decide.
“One of the biggest and most underappreciated surprises of 2025 has been the extraordinary outperformance of emerging market (EM) equities,” Lisa Shalett, chief funding officer at Morgan Stanley Wealth Management, mentioned in a December 15 be aware.
“Overweighting the US has served global investors well the past 15 years,” Shalett mentioned. “That said, we believe shifting geopolitical, monetary and fiscal policy regimes amid technological upheaval and the constraints of developed world debt are creating a need for diversification beyond US stocks and bonds for long-term investors.”