Matrixport Research Report | Re-examining the Long-term Allocation Value of U.S. Stocks: Institutional Dividends, Industrial Cycles, and Global Capital Resonance

In the current context of heightened volatility across various asset classes, it is meaningful to reassess the core allocation value of U.S. stocks. Within the global equity assets, U.S. stocks can still be viewed as one of the core allocation options by some long-term investors. This judgment is not based on a short-term bet on the macro environment of 2026, but rather stems from three more stable and sustainable structural drivers: the compounding foundation built on institutional advantages, the real demand generated by technological innovation, and the long-term migration of global capital allocation logic.

Institutions and Historical Compounding: An Unreplicable "Underlying Structure"

From the beginning of 2015 to the end of 2025, the Nasdaq Composite Index has increased by approximately 2 to 3 times compared to the ChiNext Index and the Hang Seng Tech Index. More importantly, its maximum drawdown during the sample period was only -36.4%, significantly lower than the -69.7% and -74.4% of the latter two. This indicates that in the U.S. stock market, investors find it easier to realize returns through "time + compounding" rather than "timing the market."

This result is not coincidental but a quantitative reflection of institutional advantages. The U.S. capital market has constructed a complete innovative financing chain from venture capital, private equity financing to listing and refinancing, allowing companies to acquire resources with lower friction over a longer period, forming a positive cycle of "investment - growth - reinvestment." At the same time, publicly listed companies generally adhere to cash flow discipline and shareholder return mechanisms, making the earnings base of the index exhibit stronger resilience amid macro fluctuations. Additionally, the global pricing attribute of dollar assets endows U.S. stocks with a natural liquidity absorption capacity—when risk appetite contracts, funds flow back to safety, and when it expands, it absorbs incremental risk exposure. This dual moat of "institution + currency" is the fundamental reason why the compounding effect continues to be realized.

AI-Driven Industrial Cycle: From "Valuation Imagination" to "Real Investment"

Tech leaders have contributed the majority of the excess returns in this round of U.S. stocks. However, contrary to some market concerns about "bubble theories," we believe that we are currently at a critical stage of the AI industrial cycle transitioning from "infrastructure expansion" to "application penetration," characterized by the parallel validation of real demand and real investment.

According to Stanford's "AI Index 2025," 78% of organizations reported using AI in 2024, a significant increase from 55% in 2023, indicating that demand-side diffusion is accelerating. On the supply side, capital expenditure by U.S. publicly listed AI-related companies has increased from approximately $208.26 billion in 2019 to $384.44 billion in 2025, a cumulative growth of nearly 100%. This is not a case of "storytelling followed by retreat," but rather a genuine expansion of computing power and infrastructure with real capital.

We categorize the path to AI profitability into three stages: the infrastructure dividend period, the platform expansion and service realization period, and the application layer penetration and business model reconstruction period. The current market is still in the transition window from the first stage to the second stage, with application layer penetration rates far from saturation. Even if the growth of leading stocks slows marginally, the cost reduction and efficiency improvement brought by AI will continue to spread to more industries, providing broader and longer-tail growth momentum for U.S. stocks.

Global Capital Allocation: Shifting from "Transactional Inflows" to "Structural Increases"

Over the past three years, the scale of U.S. equity holdings by overseas investors has shown a "step-up" increase—from $14.63 trillion in 2023 to $21.59 trillion in 2025, with a cumulative increase of approximately 47.6% over two years. This level of sustained growth resembles a long-term adjustment in the allocation weight of global institutional funds rather than short-term chasing.

From a regional perspective, Europe contributed about 51% of the increment, further confirming that this is a strategic rebalancing primarily driven by mature market funds. The underlying motivations can be summarized in three points: first, the U.S. stock market is the only super-large-scale market capable of accommodating trillion-level incremental funds with controllable trading impact costs; second, the continuity, comparability of information disclosure, and predictability of the regulatory system significantly reduce the information asymmetry costs of cross-market investments; third, the U.S. stock market provides the most concentrated supply of high-quality assets in long-term tracks such as technology, software, cloud, and AI platform companies, and the maturity of ETFs and index tools facilitates the expression of long-term allocation views at low cost and high efficiency.

Macroeconomic Environment: Coexistence of Mild Rate Cuts and Policy Games, but No Change in Long-Term Direction

The macro baseline scenario for 2026 is closer to "declining interest rates + economic cooling but still resilient." The Fed's SEP predicts that the median policy rate will be around 3.4% by the end of 2026, a marginal decline from the current target range, which is favorable for corporate financing and valuation environments. Although economic growth is slowing from high levels, the CBO still predicts it will maintain around 1.8%, indicating a normal growth range, and corporate earnings are more likely to exhibit a path of "slowing growth rather than a cliff-like downward revision."

A noteworthy disruptive variable is tax policy. Several individual and family provisions from the 2017 tax reform are set to expire at the end of 2025, making it highly probable that 2026 will enter a period of intense policy games. Fiscal pressures may exacerbate fluctuations in long-term interest rates, causing the market to be more volatile in the short term. However, it is essential to distinguish that volatility does not equate to a reversal of trends. As long as the three long-term drivers—institutional advantages, industrial cycles, and capital structure—do not undergo fundamental upheaval, short-term policy disruptions may actually provide a window for phased allocation and extended holding periods.

The long-term allocation value of U.S. stocks is essentially a product of a "system - industry - capital" integrated positive feedback system. It does not rely on macro good fortune in any given year, nor is it tied to the valuation myth of a single leading stock, but is rooted in more stable and replicable structural dividends. For long-term compounding-focused allocation funds, the "core underlying asset" attribute of U.S. stocks has not diminished; rather, against the backdrop of rising global uncertainty, it appears increasingly scarce.

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Disclaimer: The market carries risks, and investment should be approached with caution. This article does not constitute investment advice. Digital asset trading may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.