America’s Market Crown Is Slipping: Global Stocks Surge Ahead as U.S. Posts Worst Relative Start Since 1995

For decades, Wall Street has been the gravitational center of global investing. In 2026, that pull is weakening—and the rest of the world is starting to move faster without it.

U.S. equities are off to their worst relative start to a year since 1995, dramatically lagging international markets that have quietly delivered powerful gains, according to new research from Goldman Sachs.

The shift is raising a once-unthinkable question among global investors:
Is capital finally rotating away from the United States after a decade of dominance?

So far this year:

Zoom out to a full year, and the divergence becomes even more pronounced:

What was once a narrow valuation gap has turned into a performance chasm.

For years, investors paid higher prices for American equities on the assumption that U.S. innovation—especially Big Tech—would consistently outgrow the rest of the world.

But that premium now looks stretched.

Economists at firms including Apollo Global Management note that U.S. price-to-earnings ratios have climbed to about 40% higher than those in other developed markets, a sharp break from the parity seen after the global financial crisis.

“The re-pricing of the U.S. dollar and erosion of America’s equity advantage was brutal,” wrote strategists at Macquarie, pointing to 2025 as the inflection point when global capital began reassessing its allocations.

Another concern: concentration risk.

Data compiled by Lord Abbett shows that the top 10 U.S. companies now account for roughly 40% of the market’s weight, double their influence from a decade ago.

This means America’s benchmark indices are more exposed than ever to:

If expectations around artificial intelligence cool, analysts warn, the ripple effects could hit the entire index disproportionately.

While U.S. equities wrestle with high valuations and crowded positioning, international stocks entered 2025 comparatively cheap.

That valuation cushion has turned into a tailwind.

“The U.S. market looks high-priced, top-heavy, and low-yielding compared with international counterparts,” said analysts at Morningstar, adding that overseas markets have “underpromised and overdelivered.”

The shift isn’t limited to public markets.

After more than a decade in which mergers and acquisitions capital flowed primarily into the United States, 2025 marked a reversal. According to Goldman Sachs, there were clear net cross-border M&A outflows—meaning U.S. companies are increasingly deploying capital overseas rather than attracting it domestically.

That trend suggests executives, not just portfolio managers, are finding better opportunities outside American borders.

Treasury data shows foreign ownership of U.S. equities has flattened over the past four years, ending a nearly two-decade climb.

Strategists say this isn’t an exodus. It’s something subtler—and potentially more important:

A pause.

And in global capital markets, pauses can signal turning points.

Several forces are converging:

Analysts at LPL Financial caution that valuations alone rarely trigger reversals—but once momentum shifts, moves can become amplified if fundamentals support them.

The United States is still the world’s largest and most liquid equity market. Its innovation engine remains formidable.

But for the first time in years, investors are seriously diversifying away from a U.S.-centric strategy—not out of fear, but because opportunities elsewhere finally look compelling again.

The result is a global investing landscape that feels less like a one-way trade and more like a competitive race.

And in the early months of 2026, Wall Street is no longer running alone at the front.