The Dollar's Decline Fuels Tech's Global Dominance: Why Multinational Tech Stocks Are the Play in a Weaker Dollar Environment

The U.S. dollar's sustained decline this year—from a peak of 107 in April to around 98 in July—has created a unique opportunity for multinational technology companies. As the greenback weakens, tech firms with significant international revenue exposure are benefiting from currency tailwinds, while tariff uncertainties have done little to dent demand for cutting-edge hardware and AI-driven solutions. This dynamic positions S&P 500 tech stocks with over 50% foreign sales as prime candidates for outperformance. Here's why investors should lean into this trend—and where to look for the best opportunities.

The Dollar's Decline: A Windfall for Global Tech Players

A weaker dollar acts as a hidden profit booster for multinational corporations. When the dollar falls, revenue generated in stronger foreign currencies—like the euro or yen—translates into more dollars when repatriated. For tech firms with 50% or more of sales overseas, this effect is magnified. Consider NVIDIA, which derives ~70% of revenue from outside the U.S., or Texas Instruments, which relies on international markets for ~85% of its business. A 10% dollar decline could add 3–5% to their reported earnings, all else equal.

The correlation is stark: since the dollar's peak in April, the S&P 500 Technology Sector has risen ~12%, outperforming broader indices. This divergence underscores how currency dynamics are favoring global tech players over domestically focused peers.

Tariffs Take a Backseat to AI Demand

While the specter of “Liberation Day” tariffs looms—set to hit 100+ countries by August 1 unless trade deals are finalized—the sector's resilience is undeniable. Earnings calls from AMD, Intel, and Applied Materials highlight that AI hardware demand is proving inelastic, even amid geopolitical posturing.

For example, AMD's CFO noted in its Q2 report: “Global data center spending for AI chips remains robust, with no material impact from recent tariff threats.” Similarly, Intel's CEO emphasized that 80% of its AI-related revenue flows from non-U.S. markets, where demand is driven by hyperscalers and governments racing to build AI infrastructure.

Crucially, tariffs have been delayed or diluted in key regions. Canada agreed to scrap its digital services tax in exchange for a grace period, while China's deadline has been pushed to August 12. This ambiguity has kept markets from pricing in worst-case scenarios, allowing tech stocks to focus on fundamentals.

The Dual Tailwinds: Currency Gains + AI's Insatiable Appetite

The best-positioned companies are those that ride both the dollar's decline and the AI boom. Take NVIDIA, whose H100 and H800 chips are the backbone of large language models. Its international sales grew 18% in Q2 despite macroeconomic headwinds, fueled by hyperscaler demand. The weaker dollar likely added ~$0.50 to its earnings per share in the quarter, amplifying its already strong results.

Meanwhile, ASML, the Dutch semiconductor equipment maker with ~90% of sales outside the U.S., benefits from the dollar's decline while serving the global chip shortage. Its lithography systems are critical for AI chip production, making it a beneficiary of both currency tailwinds and structural demand.

Investment Thesis: Overweight S&P 500 Tech with Global Reach

The case for overweighting multinational tech stocks is twofold:
1. Currency Tailwinds: A dollar at 95–97 (its likely range by year-end) could add 5–8% to annual earnings for firms with 60%+ international sales.
2. AI's Growth Engine: The global AI race is creating a multi-year demand cycle for semiconductors, cloud infrastructure, and robotics.

Top Picks:
- NVIDIA: Dominates AI chip design and benefits from its 70% international sales.
- ASML: Critical for advanced chip manufacturing, with 90% of revenue abroad.
- Texas Instruments: High exposure to industrial AI applications in Europe and Asia.
- Broadcom: Benefits from enterprise AI infrastructure spending.

Avoid: Domestically focused software or hardware firms with <40% international sales. They lack the dual tailwinds and may face margin pressure if the dollar stabilizes.

Risks and Considerations

• Tariff escalation: If the U.S. imposes tariffs without carve-outs, some companies could face supply chain disruptions.
• Global growth slowdown: A recession in Europe or Asia could temper demand for tech hardware.
• Dollar rebound: If the Fed delays rate cuts or geopolitical risks abate, the dollar could rally, reversing currency benefits.

However, these risks are outweighed by the sector's structural advantages. The AI boom is too large and too fast-moving to be derailed by tariffs, while the dollar's long-term overvaluation (two standard deviations above its historical average) suggests further declines are likely.

Conclusion: Tech's Global Edge Is Here to Stay

The weakening dollar and AI's global adoption have created a rare alignment of forces for multinational tech stocks. Companies with deep international ties are not just surviving—they're thriving. For investors, this is a “buy the dip” opportunity in names like NVIDIA and ASML. The tailwinds are too strong, and the demand too insatiable, to ignore.

In a world where the dollar's decline and AI's rise are twin certainties, the best plays are already writing their own rules.