The Dollar's Decline Fuels Global Equity Gains: Why Multinationals Are Poised to Lead

The U.S. dollar's sustained decline is reshaping equity markets, favoring companies with significant international exposure. A weakening greenback is amplifying earnings growth for firms with non-U.S. revenue streams, while domestic-focused peers face headwinds. Goldman Sachs' analysis highlights a stark performance gap: internationally exposed stocks outperformed domestically focused peers by 11% to 4% in 2025, driven by currency tailwinds and strategic advantages. This divergence underscores a compelling investment thesis for investors to pivot toward multinational giants in tech and consumer discretionary sectors.

Currency Fluctuations as a Catalyst

The dollar's 8% decline against major currencies since mid-2024 has created a powerful tailwind for firms with ≥80% non-U.S. sales. When foreign revenue is converted back to dollars, it translates to higher earnings for U.S.-listed companies. This effect is particularly pronounced in sectors like technology and consumer discretionary, where pricing power and geographic diversification are critical.

For example, Philip Morris International (PM), with over 99% of sales outside the U.S., benefits directly from a weaker dollar. Its tobacco products in Europe and Asia are priced in local currencies, which strengthen relative to the dollar, boosting revenue. Similarly, Las Vegas Sands (LVS), reliant on Asian tourism, sees its Macau and Singapore operations gain purchasing power when the dollar weakens, lowering costs for foreign visitors.

Tech Sector: Global Dominance Meets Valuation Opportunities

Tech giants with heavy international exposure—such as those in semiconductors and software—stand to gain disproportionately. Consider Nvidia (NVDA), which derives ~60% of revenue from Asia, or ASML Holding (ASML), with 85% sales outside the U.S. Both benefit from forex gains and the reshoring boom, which fuels demand for their products globally.

The sector's valuation also presents a compelling case: tech stocks with >80% non-U.S. sales trade at 20% lower P/E ratios than domestic peers. This discount reflects investor skepticism about geopolitical risks, such as Trump-era tariffs. However, firms with robust inventory buffers and supply chain flexibility—like Texas Instruments (TXN)—can mitigate tariff impacts, making them attractive buys.

Consumer Discretionary: A Global Play on Recovery

Consumer discretionary stocks like Booking Holdings (BKNG) and Amazon (AMZN) are set to benefit from a weaker dollar-driven rebound in travel and e-commerce. BKNG's international bookings grew 18% in Q2 2025, fueled by eurozone and Asian demand, while Amazon's global Prime membership expansion in markets like India and Brazil offers scalable growth.

These companies also leverage foreign exchange tailwinds to offset rising input costs. For instance, Amazon's European operations saw operating margins expand by 200 basis points in 2025 due to euro appreciation.

Navigating Tariffs and Policy Risks

While tariffs remain a concern, multinational firms with geographic diversification and local partnerships are navigating risks effectively. For example, LVMH, a luxury conglomerate, has shifted supply chains to Vietnam and Indonesia to circumvent U.S.-China tariffs, maintaining margin resilience. Similarly, PepsiCo (PEP) uses local manufacturing in emerging markets to reduce reliance on transpacific shipments.

A Call to Action: Reallocate Ahead of Fed Rate Cuts

The Fed's expected rate cuts in late 2025 will further weaken the dollar, accelerating the outperformance of internationally exposed stocks. Investors should prioritize:
1. Tech multinationals with non-U.S. revenue ≥80% (e.g., ASML, NVDA).
2. Consumer discretionary leaders in travel and e-commerce (e.g., BKNG, LVS).
3. Value plays in emerging markets, like India's IT sector, which Goldman Sachs forecasts to deliver mid-double-digit earnings growth.

The time to act is now. As the dollar's decline accelerates and global markets catch up to this trend, portfolios tilted toward multinational champions will capture the next phase of equity gains.

Investors should consider risks such as geopolitical instability and currency volatility when reallocating. Consult with a financial advisor before making decisions.