The trend of US investors shifting to overseas markets is accelerating, with billions flowing out of domestic equities as Big Tech returns cool and foreign markets deliver stronger gains.
In the past six months, US-domiciled investors have withdrawn about $75 billion from US equity products. Of that, $52 billion has exited since the start of 2026 alone, marking the largest early-year outflow in at least 16 years, according to LSEG/Lipper data.
This movement comes despite a weaker dollar, which makes overseas investments more expensive for Americans. Even so, investors appear eager to diversify beyond Wall Street.
For years after the 2009 global financial crisis, the “buy America” strategy rewarded investors. Strong earnings growth and technology dominance drove US stocks higher. More recently, the AI boom pushed the S&P 500 to record levels.
Global software stocks continue to sell-off & Indian IT majors join in as fears of disruption by AI grow. @Reematendulkar shares the numbers#IT #ITSellOff #GlobalITSellOff #CNBCTV18Digital pic.twitter.com/mSzEw92DM9
— CNBC-TV18 (@CNBCTV18News) February 24, 2026Now, however, concerns over AI risks and rising costs have cooled enthusiasm. High valuations in major tech companies such as Nvidia, Meta and Microsoft have made investors more selective.
Bank of America’s February survey showed fund managers moved from US equities into emerging markets at the fastest pace in five years.
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So far this year, US investors have directed around $26 billion into emerging-market equities. South Korea received the largest share, followed by Brazil.
Performance differences are striking. Over the past 12 months, the S&P 500 rose about 14%. In comparison, Tokyo’s Nikkei gained 43% in dollar terms, Europe’s STOXX 600 climbed 26%, Shanghai’s CSI 300 rose 23%, and Seoul’s KOSPI doubled in value.
Strategists say the rotation reflects both growth and valuation trends. US stocks trade at roughly 21.8 times forward earnings, compared with about 15 times in Europe, 17 in Japan, and 13.5 in China.
Laura Cooper of Nuveen noted that investors are increasingly assessing global opportunities from a valuation perspective. She highlighted cyclical growth in Europe and Japan as key drivers.
European banking stocks surged last year and continued rising into 2026. Meanwhile, US capital flows into Europe have picked up since mid-2025.
Since January last year, nearly $7 billion has moved into European equity products. During Trump’s first term, by contrast, investors pulled roughly $17 billion from those markets.
Some analysts describe the trend as a broader global rotation. While US markets remain influential, investors are clearly looking further afield for value and diversification.
