International technology companies are poised to deliver faster earnings growth than their U.S. counterparts through 2028, according to a recent outlook from Matt Burdett, head of equities at Thornburg Investment Management.
AI spending drives the divergence
Burdett’s report notes that consensus estimates call for non-U.S. technology stocks to grow earnings by an average of 58% annually through 2028. This pace is well ahead of the 35% growth projected for U.S. tech companies during the same period. The divergence stems from how U.S. hyperscalers are funding their artificial intelligence buildouts. Large technology companies, including Oracle Corp. and Meta Platforms, are projected to spend nearly all of their operating cash flow on data centers and equipment in 2026. This rapid spending pace has made this group the largest issuer of new corporate bonds this year.
Despite the massive investment, AI providers have yet to prove their business models can turn a consistent profit. While AI models have generated real revenue, the scale of spending has also created bottlenecks in chips and infrastructure that resemble scarce-resource pricing. The Thornburg International Growth ETF (TXUG) targets non-U.S. companies posting faster earnings growth without the debt hyperscalers are taking on to fund AI spending. The fund’s strategy focuses on regions that are strengthening their manufacturing and export bases.
Export growth in some of those countries has outpaced the broader trend. Vietnam’s exports climbed 26% year over year in the 12 months after the Trump administration’s April 2025 tariffs took effect, while South Korea’s exports grew 11% over the same stretch. Both countries are benefiting from supply chains shifting away from the U.S., according to Thornburg. Neither is taking on the debt load tied to building AI data centers. Key economic indicators, including oil prices, Treasury yields, and the U.S. Dollar Index, also normalized quickly after this year’s disruptions. They moved faster than they did following prior energy shocks, offering a steadier backdrop for corporate earnings abroad.
This growth gap is not universal. Outside of the technology sector, U.S. companies are projected to grow earnings by 12% a year through 2028, edging out the 10% pace expected for international companies, according to the report.
International tech opportunities
Investors looking for exposure to this faster growth trajectory face a complex setting. The heavy borrowing required for domestic AI infrastructure creates a different risk profile for U.S. tech firms compared to their international peers. For those seeking exposure to companies without this capital burden, international markets present a distinct option. The difference in spending priorities highlights how regional economic conditions can shape investment opportunities even within the same industry. Investors can find opportunities in markets prioritizing value over debt.
The Thornburg International Growth ETF invests in a basket of international stocks that meet specific criteria.
Quality investments are a key component of the fund’s strategy, helping to mitigate risk while capturing growth.
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