On July 24, 2026, all three major US stock indexes rose, with the S&P 500 closing at 6,852.34, up 0.78%, once again setting a new record. The Nasdaq Composite rose 1.12%, while the Dow Jones Industrial Average edged up 0.35%. This rally was mainly driven by AI-related tech stocks, with NVIDIA, Microsoft, Google and others hitting new highs. Against the backdrop of increasing divergence in global stock markets, why can US stocks continue to attract global capital? This article explores the five core logics behind US stock investment in light of the latest market dynamics.
1. AI Industry Explosion: From Concept to Profit
The second-quarter 2026 earnings season is in full swing. As of July 24, over 40% of S&P 500 components have reported results. Among them, AI chip leader NVIDIA saw revenue surge 112% year-on-year, with data center revenue exceeding $50 billion for the first time, far above expectations. Microsoft’s intelligent cloud business (Azure) grew 38%, with AI services contributing over half of the growth. Alphabet’s AI advertising tools boosted ad revenue by 15%. These figures show that AI has moved from hype to substantive profitability.
Meanwhile, Meta, Amazon, Tesla and others are accelerating AI investments. According to Goldman Sachs, global AI infrastructure spending is expected to exceed $300 billion in 2026, with US companies accounting for over 60%. This massive capital expenditure is translating into real productivity gains and revenue growth, providing solid earnings support for US tech stocks.
2. Better-Than-Expected Corporate Earnings: US Stock Valuations Shine
Among S&P 500 companies that have reported, over 78% beat analyst expectations, a proportion higher than the five-year average. The S&P 500’s forward P/E is around 22x, not cheap, but considering earnings growth (12% expected for 2026), its PEG ratio is just 1.1, still within reasonable range. In comparison, the STOXX 600 has a forward P/E of about 16x but earnings growth of only 3%; the MSCI Emerging Markets index has a P/E of about 14x, but growth is hampered by currency and geopolitical risks, leading to higher uncertainty.
In addition, US corporate buybacks continue to support stock prices. According to FactSet, S&P 500 companies repurchased a total of $520 billion in the first half of 2026, up 18% year-on-year. With both earnings beats and buybacks, US stock valuations have not been significantly weakened despite index highs.
3. Fed Rate Cut Expectations: Easing Liquidity Environment
This week, Fed officials’ remarks signaled a dovish stance. Fed Chair Powell said in a public event on July 23 that inflation is close to the 2% target and the labor market is gradually cooling, suggesting rate cuts may be considered in the coming months. Markets reacted positively, with the CME FedWatch tool showing a 72% probability of a 25-basis-point rate cut in September.
Rate cut expectations have pushed US Treasury yields lower, with the 10-year yield falling from 4.5% at the start of July to 4.25%. Historical data shows that US stocks typically perform well in the 3-6 months before a rate-cutting cycle begins. For example, in 1995 and 2019, US stocks experienced significant rallies before rate cuts. The current environment is similar: inflation falling, moderate economic growth, and monetary policy about to pivot.
4. USD Asset Safe-Haven Appeal: Global Fund Reallocation
Entering the second half of 2026, global geopolitical risks remain prominent: recurring tensions in the Middle East, emerging European energy crises, and debt pressures in some emerging markets. In this context, USD assets, as the preferred global safe haven, continue to attract capital inflows. Net cross-border capital flows into US stocks and bonds reached $120 billion in Q2 2026, with significant increases from Asia-Pacific and the Middle East.
The US dollar index closed near 99.85 on July 24, slightly down from the start of the year but still in relatively strong territory. The liquidity and institutional advantages of USD assets make US stocks a core option for global asset allocation.
5. Long-Term Structural Advantages: Innovation and Institutional Dividends
Over the long term, US stocks benefit from a powerful innovation ecosystem and institutional safeguards. The US leads globally in AI, semiconductors, biotech, and new energy in terms of R&D capability and commercialization environment. Nasdaq 100 constituents invest an average of over 12% of revenue in R&D, far exceeding other markets. Additionally, the US has a mature capital market system—equity incentives, delisting rules, investor protection mechanisms—that allows quality companies to continuously raise capital and scale up.
For Chinese investors, investing in US stocks can also help diversify risk and assets. Meanwhile, with channels like the Shanghai-Shenzhen-Hong Kong Stock Connect and QDII becoming increasingly convenient, the threshold for accessing US stocks continues to lower. For investors seeking long-term compound returns, it is worth considering including US stocks in their portfolios.
Conclusion
The current high levels of US stocks are not a bubble but are supported by earnings growth and accommodative liquidity. The AI industry explosion, better-than-expected corporate earnings, rate cut expectations, USD safe-haven appeal, and long-term institutional advantages form the five pillars driving US stocks higher. Of course, all investments carry risks; investors should remain vigilant about potential risks such as repeated inflation, escalating geopolitical conflicts, and tighter industry regulation. However, in the context of global asset comparison, US stocks still offer high allocation value.
(This article represents the author’s personal views only and does not constitute investment advice. Investing carries risks. Enter the market with caution.)
