Foreign investors are pouring money into U.S. stocks at a record pace, defying expectations that Wall Street’s dominance might be waning in the face of cheaper global alternatives and a weakening dollar. According to the latest Treasury International Capital (TIC) data, overseas private sector investors snapped up an unprecedented $646.7 billion in U.S. equities over the 12 months through September 2025. This figure, reported by both Reuters and other financial outlets, marks the highest annual total ever recorded and nearly doubles the previous peak of $392 billion set in 2021.
In total, foreign investors sent about $1.6 trillion into U.S. assets during this period, with stocks attracting roughly 40% of those inflows. That made equities the star attraction, outpacing U.S. Treasuries, corporate bonds, and agency debt. According to Jamie McGeever of Reuters, "The near $650 billion that overseas investors poured into Wall Street on a net basis in the year to September is around 40% of the net $1.59 trillion that flooded into U.S. assets in that time. It is the biggest foreign flow into any single U.S. asset class over the period."
The surge in foreign buying was not a steady climb. It saw dramatic spikes around the 2024 U.S. presidential election, when investors anticipated a market-friendly agenda of tax cuts and deregulation from a potential Trump administration. In September and November 2024, monthly net purchases of U.S. stocks by foreign investors exceeded $100 billion—an unusually high mark for any single month. Yet, that optimism cooled early in 2025 as tariff worries and protectionist rhetoric took center stage, only to be replaced by a new wave of exuberance as the artificial intelligence (AI) boom gripped global markets.
Indeed, the AI trade has been the engine behind the latest acceleration in foreign inflows. Over the five months leading up to December 2, 2025, net foreign purchases of U.S. stocks topped $100 billion in three separate months and exceeded $90 billion in another. As one financial newsletter put it, "Overseas demand for U.S. stocks didn't cool for long before the artificial intelligence frenzy brought it roaring back." The allure of American tech and growth companies, especially those leading the AI revolution, has kept international investors fixated on Wall Street even as other markets have posted superior returns.
That’s the paradox: while money has flooded into U.S. stocks, many major markets abroad have actually outperformed the S&P 500 in 2025. The S&P 500 was up about 15% by early December, but the MSCI Asia ex-Japan index surged nearly 25%, Germany’s DAX and Britain’s FTSE 100 both climbed almost 20%, and Brazil’s Bovespa soared 30% in local terms. In fact, dollar-based returns in these markets were boosted even further by the greenback’s decline, with Brazil’s Bovespa up an additional 20 percentage points in dollar terms. JP Morgan Asset Management estimated that international equities outperformed U.S. stocks by roughly 15 percentage points in the year through mid-November 2025—the widest gap since 1993.
Despite this, the U.S. continues to command a disproportionate share of global equity market value. By late 2025, America’s share had reached as high as 65%, up from 40% in 2008. This concentration is both a testament to the dominance of U.S. firms—particularly in technology and AI—and a source of risk for global investors. As one analysis noted, "The U.S. represents just 25% of the global economy but commands 63% of stock market value, creating a valuation imbalance."
Valuation concerns are mounting. U.S. stocks were trading at about a 34% premium to international markets by late 2025, far higher than the long-run average of 19%. The dollar itself was seen as roughly 10% overvalued relative to fair value. These factors, combined with the concentration of global portfolios in a single country’s economic and policy cycle, have led some analysts to warn of heightened risks. According to Reuters, "Where non-U.S. investors put their next marginal dollar could depend largely on the answers to three market-specific questions for 2026: Are U.S. stocks too expensive? Can U.S. earnings remain so robust? And is AI a bubble?"
For individual investors, this environment presents both opportunity and challenge. The valuation gap between U.S. and international markets is wider than it has been in decades. Markets like Korea, up 43% in 2025, and Brazil, up around 30%, have delivered returns that dwarf those of the S&P 500. JP Morgan Asset Management suggests that international equities outperformed U.S. stocks by more than 15 percentage points through mid-November, a spread not seen in over 30 years. For those heavily weighted toward U.S. equities, there’s a risk of missing out on growth and diversification opportunities abroad.
Yet, the U.S. market’s gravitational pull remains strong. Even as international markets shine, the AI-driven rally and the perceived safety of U.S. assets keep attracting foreign capital. The TIC data shows that overseas inflows into U.S. stocks broke records almost every month in 2025, and this momentum has only accelerated in the latter part of the year. As Reuters put it, "Despite all the U.S. economic, political and policy turbulence in 2025, foreign appetite for U.S. stocks has never been stronger."
Still, uncertainty looms on the horizon. The sustainability of these record inflows depends on several factors: whether U.S. stock valuations can be justified, if corporate earnings will remain resilient, and if the AI boom is indeed a lasting revolution or just another market bubble. There’s also the impact of political events to consider, such as the record-long U.S. government shutdown in late 2025, which could affect investor sentiment as fresh TIC data becomes available.
For now, the evidence is clear. Global investors are betting big on America, even as the rest of the world offers compelling alternatives. Whether this trend continues—or reverses as valuations stretch and global markets catch up—remains to be seen. As the world’s capital seeks both growth and safety, the U.S. stands at the center of a financial crossroads, with all eyes watching where the next dollar will land.
