In the premiere episode of Nikhil Kamath’s WTF is Finance podcast, renowned Indian-American investor and author Ruchir Sharma made an important observation, “The only reason for investing in the US today is AI.”
Sharma, known for his global macroeconomic insights argued that outside of artificial intelligence, the fundamentals of the US economy and stock market are increasingly unappealing for long-term investors.
“Over the next five to ten years, I think the rest of the world outperforms the US,” Sharma told Kamath. “Everything else is either too expensive or fundamentally flawed.”
AI stocks are driving the US market
Sharma acknowledged that the US market has held up well in 2025. He believes that this is due to the enthusiasm over AI stocks. “If it weren’t for the AI mania, I think the American stock market would be down,” he said.
While US market indices like the S&P 500 are up 8–9% year-to-date, Sharma pointed out that international markets are outperforming, with dollar-adjusted gains of around 20%.
American exceptionalism under pressure
Responding to Kamath’s question about the idea of “American exceptionalism,” Sharma noted that the concept is being tested.
He added that slowing population growth, weakening immigration policies, and rising global competition as challenges to the US’s long-standing dominance.
“The really underappreciated part of America’s advantage was demographics,” Sharma explained. “Because of immigration, America’s population growth rate was much faster than Europe or Japan. That’s now changing.”
He also predicted a weaker US dollar over the next five to seven years, which could further affect the country’s investment appeal.
Trump tariff on Indian goods
“Generally, from a pure economic perspective, tariffs aren’t great,” Sharma said. “They’ve rarely helped countries in the long run.” Pointing to East Asia as a success story, he argued that open markets and global competition, rather than protectionism, fuel rapid development.
When asked about India’s strategy in this context, Sharma was clear, “Show me one country that benefited from shutting itself off. I don’t know of any.”