US stocks had a remarkable 2025. But international markets did much better

A major index tracking stocks outside the US, the MSCI All Country World ex-USA, gained 29.2% in 2025, handily outpacing the S&P 500’s gain of 16.39%.

The artificial intelligence boom has benefited markets in Asia, where tech companies and chipmakers have seen surges in demand. In Europe, markets received a boost from plans for government spending on defense and improved prospects for economic growth.

A weaker US dollar also provided a tailwind for international stocks. When the dollar weakens and other currencies strengthen, investments denominated in those currencies become more valuable when converted back into dollars.

The US dollar index, which measures the dollar’s strength against six major currencies, fell by roughly 9.4% in 2025, its worst year since 2017.

Heading into 2025, US stock valuations were already relatively expensive compared to the rest of the world, creating an incentive for investors to look for returns in different markets.

“A lot of things went right for international stocks in 2025,” Michael Reynolds, vice president of investment strategy at Glenmede, told CNN.

“After a couple years of lackluster fundamentals, foreign equities put together a strong year of earnings growth,” Reynolds said. “This was highlighted by fiscal stimulus in Europe and AI-related growth in Asia.”