American equities had a brilliant 2025, but global markets became the main focus.
A major index tracking stocks outside the U.S., the MSCI All Country World ex-U.S., soared 29.2% in 2025, significantly outperforming the S&P 500’s 16.39% gain.
The artificial intelligence boom benefited Asian markets, where demand for tech firms and chipmakers increased. In Europe, markets gained momentum thanks to government defense spending plans and improved economic growth outlooks.
The weakening U.S. dollar also created a tailwind for international stocks. When the dollar declines and other currencies strengthen, investments denominated in those currencies become more valuable when converted back to dollars.
The U.S. Dollar Index, measuring the dollar’s strength against six major currencies, fell approximately 9.4% in 2025—its worst showing since 2017.
Heading into 2025, U.S. stock valuations were already relatively expensive compared to the rest of the world, creating an incentive for investors to seek returns across different markets.
“A lot went right for international stocks in 2025,” Michael Reynolds, vice president of investment strategy at Glenmede, told CNN.
“After several years of weak fundamentals, foreign stocks had a strong year for earnings growth,” Reynolds noted. “This was underscored by fiscal stimulus in Europe and AI-related growth in Asia.”
Tech companies and chipmakers in South Korea, Taiwan, Japan, and China benefited from investor interest in AI last year.
South Korea’s Kospi index surged nearly 76% in 2025, marking its best year since 1999. Japan’s Nikkei 225 climbed 26%, boosted by the rise of tech firms and chip manufacturers.
In Japan, memory chip producer Kioxia’s stock jumped 536%. And in South Korea, tech giant Samsung’s shares rose almost 130%.
“The AI trade has significantly broadened over the last year,” said Arun Sai, senior multi-asset strategist at Pictet Asset Management. “That optimism is increasingly being priced in beyond the U.S., spreading across the globe, especially in markets like Korea and Japan.”
In Taiwan, Taiwan Semiconductor Manufacturing Company (TSM) shares climbed 46.54% last year to reach record highs. Meanwhile, Chinese company Alibaba’s (BABA) stock rose 75.81% following its adoption of AI and the release of its own chatbot.
Passengers pass a Taiwan Semiconductor Manufacturing Company facility in Kaohsiung, Taiwan, on June 7, 2025. TSMC shares reached all-time highs in 2025.
Passengers pass a Taiwan Semiconductor Manufacturing Company facility in Kaohsiung, Taiwan, on June 7, 2025. TSMC shares reached all-time highs in 2025. Ann Wang/Reuters
Growth and Defense
Stocks in Europe rose early in 2025 as the German government enacted landmark reforms to boost defense spending. European defense stocks increased last year, with German manufacturer Rheinmetall surging 154%.
Meanwhile, improving prospects for the economies of Greece, Spain, and Poland benefited those nations’ markets. European banks like Santander (SAN) and Deutsche Bank (DB) also had standout years, each climbing around 126% and helping lift the indices.
Spain’s benchmark IBEX 35 index rose 49%, its best year since 1993. Italy’s FTSE MIB index gained nearly 32%, marking its best year since 1998. Germany’s DAX increased by 23%, and Greece’s ATHEX Composite by 44%, both showing their best years since 2019. Poland’s WIG index rose 47%.
“In a year where dollar weakness pushed investors to scramble for global exposure, Poland offered a unique blend of growth and value,” said David Russell, global head of market strategy at TradeStation.
“Greece is finally recovering from its decade-long debt crisis,” Russell added. “The country regained its investment grade rating from Moody’s and experienced a tourism boom. It’s a classic comeback story after a period of bad credit and low multiples.”
The U.K.’s benchmark FTSE 100 index climbed 21.51%, its best year since 2009. The index then began 2026 on a strong note, briefly pushing above a record 10,000 points for the first time on Friday.
Tourists look at the 5th-century BC Parthenon temple, free of scaffolding after decades of restoration, in Athens on October 17, 2025.
Tourists look at the 5th-century BC Parthenon temple, free of scaffolding after decades of restoration, in Athens on October 17, 2025. Louisa Goulimaki/Reuters
Diversification
For U.S. investors, analysts see the dollar as a key determinant in assessing the returns of international stocks.
“If the dollar continues to weaken, foreign equities may continue to have a tailwind,” said Reynolds from Glenmede.
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