U.S. Stocks Lag Global Markets with 40% P/E Premium; Japan Pledges $36B for 9GW Ohio Plant
Goldman Sachs data shows US stocks have their worst start since 1995, flat to slightly down year-to-date versus an 8% gain in ex-US markets and trading at a 40% price-to-earnings premium over non-US peers. Japan will invest $36 billion of a $550 billion pact in a 9 GW Ohio energy and minerals project.
1. US Market Underperformance
US equities recorded their worst start since 1995, remaining flat to slightly down year-to-date compared with an 8% gain in global ex-US indexes. Over the past 12 months, US stocks have risen 11% while foreign equities climbed roughly 30%, marking one of the widest performance gaps in decades.
2. Elevated Valuations and Risks
Domestic stocks now trade at about a 40% price-to-earnings premium versus non-US peers, driven by heavy concentration in technology and AI-exposed names. Investors are also pricing in geopolitical risk premiums tied to tariffs, supply chain tensions and shifting foreign policy stances.
3. Japan's $36B Investment Plan
Under the first tranche of a $550 billion US-Japan trade agreement, Japan will commit $36 billion to US energy and critical minerals projects. The funds aim to diversify Japan’s supply chains, reduce reliance on China and support the US critical minerals strategy highlighted in recent policy discussions.
4. Ohio 9 GW Energy Project
The $36 billion allocation includes a major 9 gigawatt natural gas–fired power plant in Ohio, intended to serve emerging data center hubs and AI infrastructure. The project underscores the interplay between energy security, industrial investment and evolving tech demands in key US regions.