After more than a decade of US market leadership driven by technology mega-caps at the forefront of the AI revolution, international stocks have been attracting renewed investor interest that could continue in the coming months and years.
2026 midyear international stock outlook
In a rare show of strength, international stocks last year outperformed US equities by about 14 percentage points, in part due to American tariff policies, a weaker dollar, and aggressive interest rate cuts in some countries and regions. So far in 2026, non-US shares have continued to climb, yet generally remain valued at a discount to US stocks.
That momentum could continue as a number of trends transcend borders, helping to drive investment opportunities in developed and emerging non-US markets, including:
- Massive AI investment has been spilling into second-order industries, such as computer hardware, power delivery, and basic materials.
- Strategic investments by governments eager to increase self-sufficiency have benefited industrials, materials, and financials.
- European banks, emerging from an extended debt crisis, may offer solid prospects at attractive valuations.
- China and emerging markets are evolving into innovation hubs.
For investors interested in expanding their horizons beyond the Mag 7, Fidelity managers shared their midyear outlook on international stocks.
Opportunity for AI stocks: The AI boom is more than just a US story
In the race for AI leadership, US tech giants are expected to spend over $700 billion this year on data centers and other infrastructure,1 helping power the S&P 500 to record highs in recent months. Yet, AI is not just a US story. This massive spending on AI infrastructure has helped generate business growth around the globe.
Companies in Asia and Europe have been major players in the global AI supply chain, including Taiwan Semiconductor Manufacturing (
Based on companies’ spending plans, these capital flows are expected to continue in the coming months, Fidelity managers say.
“Corporate spending on building AI capabilities remains robust because many companies don’t want to be left behind by competitors,” says Bill Bower, manager of the Fidelity® Diversified International Fund (
In Japan, several companies have been playing an essential role in the manufacturing of specialized semiconductor equipment, advanced robotics, and materials.
“Japanese companies have been leaders in providing foundational base materials and packaging-related technologies that are helping fuel the innovation occurring in the semiconductor industry,” says Masaki Nakamura, manager of the Fidelity® Japan Smaller Companies Fund (
One company that has illustrated this theme is Resonac Holdings (
Nakamura has also favored manufacturers, such as Toyo Gosei (
Another company that has benefited is Renesas Electronics (
Meeting the demand for AI’s building blocks
Demand for AI capacity is driving the development of data centers, which in turn fuels sales not just of chips and memory but also power-grid infrastructure and materials to deliver that power, including copper.
Ivan Xie, a co-manager of the Fidelity® China Region Fund (
“I’m on the lookout for stocks in other areas that I believe are inexpensive and could benefit from some kind of growth catalyst,” Xie says.
Along the same lines, Bower’s Diversified International Fund has included Schneider Electric (
Bower has also invested in Antofagasta (
Emerging markets have become innovation hubs
Another key trend to watch is the transformation of certain emerging markets from low-cost manufacturing hubs into innovation-driven growth markets.
“The world is evolving rapidly and nowhere is this transformation more evident than in China,” says Di Chen, manager of the Fidelity® Emerging Asia Fund (
Cutting-edge technology and advancements in health care are leading the charge in China, Chen says. Examples of this theme have included WuXi XDC (
“The nation’s aging population, coupled with lifestyle factors like diet and stress, have exposed a significant gap between medical needs and available treatments,” Chen says. “This gap between need and availability creates what I consider a compelling prospect for investors.”
Strategic spending on infrastructure and energy
Geopolitics, supply chain disruptions, and electrification are fueling a long-term investment super cycle across sectors. Reshoring—the return of manufacturing that has been offshored—and enhancing national supply-chain security are driving a wave of strategic spending on energy infrastructure, defense, and other needs.
“Recent shocks to global supply chains stemming from the pandemic, geopolitical strife, and trade wars have pushed governments across the globe to rethink their reliance on external suppliers,” says Alex Zavratsky, manager of the Fidelity® International Value Fund (
Holdings aligned with these long-term trends have included defense firms such as Germany’s Rheinmetall (
On a related front, Brazil has announced plans to expand the nation’s drinking water and sewage infrastructure, making it accessible to more citizens. Currently, about 60% of Brazilians are estimated to have sewer coverage.
“We’re investing in Brazil’s efforts to improve its water infrastructure,” says John Chow, manager of the Fidelity® Sustainable Emerging Markets Equity Fund (
European financials could benefit from the region’s recovery
European banks are lately emerging from the continent’s debt crisis, which began in 2008 but continued to be felt by the region into the early 2020s, offering opportunities to buy into their rebound at attractive valuations.
“Banks in several of the countries that struggled the most during the European debt crisis, including Greece, Portugal, Ireland, Italy, and Spain, offer compelling value today,” says Bill Kennedy, manager of the Fidelity® International Discovery Fund (
As of April 30, 2026, financial stocks accounted for 23% of the portfolio. Kennedy says he has favored banks exposed to economies expected to outpace the average Eurozone growth rate, including AIB Group (
“These banks have strengthened their capital positions and risk controls substantially since the debt crisis, and they tend to have better prospects for loan growth,” Kennedy says.
For investors, these trends point to a more diversified set of opportunities globally. As global markets evolve, Fidelity’s portfolio managers suggest that some of the most compelling opportunities may lie beyond the obvious, across regions, sectors, and industries benefiting from powerful structural change.
For self-directed investors using US accounts, many overseas-listed companies are available only through American Depository Receipts (ADRs), some of which are traded in less liquid over-the-counter markets. Investors might consider adding international exposure indirectly, through mutual funds, ETFs, and separately managed accounts.
More on the funds mentioned above
Investors can learn more about the mutual funds mentioned in this article, including fund objectives and most recent complete holdings, by visiting the fund summary pages on Fidelity.com:
- Fidelity® Diversified International Fund (
) - Fidelity® Japan Smaller Companies Fund (
) - Fidelity® China Region Fund (
) - Fidelity® Emerging Asia Fund (
) - Fidelity® International Discovery Fund (
) - Fidelity® International Value Fund (
) - Fidelity® Sustainable Emerging Markets Equity Fund (
)