In the coverage of the genuinely broad-based global equity boom, an important detail is often overlooked: In the past 18 months, as that boom has reached what appears to be its peak, international markets have hugely outperformed the United States.<\/p>\n
Since the beginning of 2025, equity markets have generated returns of 68 percent in emerging economies, 45 percent in Europe and 44 percent in Japan, while the U.S. equity market has been the laggard, generating returns of \u201conly\u201d 26 percent. If history is anything to go by, the massive I.P.O.s planned by Anthropic, SpaceX and OpenAI will probably continue to weigh upon the relative performance of the U.S. market.<\/p>\n
Because the U.S. leads the global A.I. industry, the dominant narrative in financial markets is still about American exceptionalism. Many investors remain convinced that the United States is the singular engine of global capitalism and that its technological lead cannot be challenged. Why does this idea persist?<\/p>\n
Some of it is historical. Foreign markets have lagged behind the United States for so long that we have learned to ignore them. While the U.S. market has been making new highs for years, European equities have only just reached the high that they set almost 20 years ago, in 2007, just before the global financial crisis. And the Nikkei in Japan finally eclipsed its 1989 bubble peak only in 2024 \u2014 a 35-year journey. Even the broad emerging market indexes, after two decades of treading water, have finally broken into new territory.<\/p>\n
It was perhaps inevitable that at some point global markets would catch up. But the move in foreign markets has not simply been a matter of playing catch-up. Corporate profits and earnings have been unusually strong across every major geographic region in 2025. This has a lot to do with the knock-on effects of the A.I. infrastructure construction boom that is occurring around the world. To understand why requires tracing where the money being spent on A.I. goes once it leaves the balance sheets of the U.S. technology companies driving the boom.<\/p>\n
Many people treat A.I. as a purely American technology story. But the physical construction of artificial intelligence depends on a supply chain of extraordinary global complexity. At its core sits an unusual triumvirate: Nvidia\u2019s chip designs from California, ASML\u2019s precision lithography equipment from the Netherlands, and TSMC\u2019s manufacturing facilities in Taiwan, Japan, China and America \u2014 three companies that together control an overwhelming majority of advanced A.I. chip production.<\/p>\n
Then there is memory. Every A.I. chip requires vast quantities of high-bandwidth memory made largely in South Korea, where SK Hynix alone commands a 57 percent share of the global market.<\/p>\n
Powering the data centers themselves requires hardware that is, to a striking degree, European. France\u2019s Schneider Electric, Switzerland\u2019s ABB and their continental peers dominate the global market for the transformers, switching gear and energy management systems without which no data center operates. These are not peripheral vendors. They are the picks-and-shovels companies of the A.I. era \u2014 and they are headquartered outside Paris and in Zurich, not Palo Alto.<\/p>\n
The international earnings boom reaches beyond A.I. Take Japan. After decades of pressure from domestic reformers and foreign activist investors, Japan has experienced a structural transformation<\/a> in its corporate culture. A new generation of Japanese executives has been willing to do what their predecessors refused: return capital to shareholders and dissolve the cross-shareholding arrangements that had entombed corporate balance sheets for generations.<\/p>\n Return on equity is now pursued as a genuine strategic goal rather than an afterthought. In Europe, Russia\u2019s invasion of Ukraine triggered a defense-spending renaissance across NATO that has proved a sustained earnings tailwind for aerospace and defense companies, and Germany\u2019s dramatic abandonment of its long-held fiscal austerity has begun injecting fresh stimulus across the continent.<\/p>\n Part of the reason the global nature of the bull market has been obscured is structural. The United States now represents roughly 65 percent of global equity market capitalization. When something is that large, it is easy to mistake the part for the whole. American financial media is, unsurprisingly, American. The indexes that pension funds and retail investors track \u2014 the S&P 500, the Nasdaq \u2014 are American. When those indexes move, it is news. When the Nikkei breaks a 35-year record, it barely earns a paragraph.<\/p>\n The U.S. economy retains enormous advantages compared with those of Europe and Japan. For example, because of its self-sufficiency in energy, it has a resilience that other regions of the world do not. That resilience has been most apparent in the three months since the start of the Iran war, allowing the U.S. market to do modestly better (5 percentage points) than Europe\u2019s and Japan\u2019s, which are more exposed to the vagaries of Middle East oil supply.<\/p>\n It remains true that the combination of deep capital markets, entrepreneurial dynamism and flexible labor markets gives American equities a structural advantage over other markets. That thesis has been repeatedly vindicated over the past 20 years. Investors who have bet against it have, more often than not, lost.<\/p>\n But after the past 18 months, it is important that we not go back to an overemphasis on the U.S. stock market to the exclusion of the rest of the world. For that would be a form of financial jingoism that leaves investors blind to the true scope of what is happening.<\/p>\n No one doubts that American technology companies, with their unrivaled ability to marshal capital and talent, have turbocharged the A.I. revolution. But bringing A.I. to fruition has required more than just American technological prowess. It has required the semiconductors of TSMC and Samsung, the lithography machines of ASML, the power infrastructure of European engineering firms, the copper and rare earths extracted from emerging markets.<\/p>\n The bull market so many think they understand is smaller than the bull market that actually exists. The rest of the world has been writing one of the more remarkable chapters in modern financial history \u2014 and we have largely been too busy watching our own screens to notice.<\/p>\n Liaquat Ahamed has worked as a professional investment manager and is the author of \u201cLords of Finance\u201d and \u201c1873: The Rothschilds, the First Great Depression, and the Making of the Modern World.\u201d<\/p>\n The Times is committed to publishing a diversity of letters<\/a> to the editor. We\u2019d like to hear what you think about this or any of our articles. Here are some tips<\/a>. And here\u2019s our email: letters@nytimes.com<\/a>.<\/p>\n Follow the New York Times Opinion section on Facebook<\/a>, Instagram<\/a>, TikTok<\/a>, Bluesky<\/a>, WhatsApp<\/a> and Threads<\/a>.<\/p>\n