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US stocks have been a winning trade over UK stocks over the past decade. According to Vanguard Research, US stocks had annual revenue of 15.5%. In contrast, UK stocks provided just 6.1%.
Naturally, UK investors followed the money. Their historically significant home bias has faded. The British now have twice as much exposure to US stocks London Stock Exchange stock.
But currency risk complicates the problem. This year, the UK pound has skyrocketed 8% against the US dollar to over $1.35. It has been traded for a short period of time since the 2016 Brexit vote.
Does this mean that now is the best time to buy US stocks? Let’s unpack it.
Currency impact
It is often overlooked, and currency fluctuations have a significant impact on the value of your portfolio. S&P 500 So far, it has won 1% in 2025. but, Vanguard S&P 500 UCits ETF It has fallen by more than 7% since January.
This is because no funds traded on popular exchanges are organized, so there is no easing to changes in exchange rates due to currency swaps or forward contracts, and its market value is calculated in pounds. This year, despite US stocks offering positive dollar returns, UK investors in the dollar-denominated S&P 500 are suffering due to greenback weaknesses against Sterling.
Invest while Sterling is rising
This may encourage some people to avoid businesses in the state. That may not be the correct response. A strong pound means that UK investors will earn more of their money when purchasing US assets.
Furthermore, Sterling’s strength often has a negative effect FTSE 100 stock. Over 80% of Footsie companies’ revenue comes from overseas. It is converted to pounds and is less valuable than when the currency was weak. It focuses more domestically FTSE 250 Companies generate most of their sales beyond the UK coast.
President Trump’s tariff blitz and attacks on the Federal Reserve have made the United States a source of global uncertainty. This could continue to weigh dollars. However, the currency is unstable. The relative strength of the pound is not guaranteed to last.
It’s a difficult investment environment to navigate. Exchange rates are not the only consideration. Revenue, profitability and valuation are also important.
US stocks to consider
Still, there are good long-term opportunities here. While it’s not a sure way to get rich, this may be the perfect moment to consider buying US stocks cheaply on a high-value pound. What’s worth seeing is the AI ​​chip maker nvidia (NASDAQ: NVDA).
The Northern Acquisition Rate (P/E) ratio of 31.3 causes a risk profile for NVIDIA stocks, but there is no equivalent to AI Computing King among UK stocks. The demand for GPUs for companies with valuable machine learning and data analytics applications is immeasurable. It shows little indication that it will fade.
First quarter revenue for semiconductor groups, which is struggling with US trade tensions with China, jumped 69% to $44.1 billion. Free cash flow has gone from 75% to $26.1 billion. These are extraordinary figures for any company, not to mention companies with a market capitalization of $3.44TRN.
Enhancing competition brings challenges to Nvidia. Microsoft and Amazon We invest billions in our own AI models. The threat should not be ignored, but Hercules’ efforts will be required to abdicate Nvidia’s market-leading position. With AI Gold Rush on, Nvidia’s shares appear to be prepared to earn profits.
The dollar recovery could be on the horizon. This will benefit new investors who are currently acting. Furthermore, I think Nvidia has enough stock growth potential to offset any further dollar weakness.