“It's frustrating as an Australian” - Why Ben Clark is looking at US stocks

Investors looking for growth should keep an eye on the US, according to TMS Private Wealth portfolio manager and partner Ben Clark, after the government provided “no plan to grow the economy or to help businesses grow” in the budget last week.

In a client update, Clark explained that there are now greater opportunities investing overseas, singling out the US as particularly attractive.

“The US quarterly season has been one of the best we've seen in recent history,” he said.

“Think whatever you want about Trump,” Clark said, but fund managers from the US have been clear that the removal of guard rails and red tape have created an “almost over-friendly environment” for businesses.

“It's washing through into the earnings of the businesses listed over there.”

This has taken the form of an expected ~20% expected earnings growth on the quarter, which is more than double the 30-year average earnings growth of the US.

“If you look at JP Morgan and the US Main Street, it's not the investment banks, they're doing about 12 to 13% earnings growth, and they're trading on PEs which are around half of Commonwealth Bank’s,” Clark said.

“It's frustrating as an Australian. I feel like a handbrake is being applied to a lot of businesses in terms of trying to grow, but if you're a global pension fund and you're looking at Australia or South Korea or America or other countries, that's where the capital is.”

More than the Mag 7

It’s no secret that the Magnificent 7 – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla – have taken an outsized share of the broader US market, making up roughly 35% of the total S&P 500 market capitalisation.

However, unlike recent quarterly earnings seasons being very concentrated, Clark said the most recent results have bucked this trend.

“This has been different, where a lot of US Main Street businesses have reported very strong results,” he explained.

“If you look at Walmart, McDonald's, Starbucks, companies like that, US banks. It's been much more broad-based, the earnings growth, it's not a small number pulling everyone else up, which shows signs of a business-friendly economy and consumers that are spending.”

The linked metrics of inflation and interest rates in the US have played a strong role in the market’s strength, which is in contrast with the Australian situation.

“The weakness that we've seen in the Australian market has not been driven by worse than expected earnings, although we are definitely starting to see downgrades coming through. It's more higher interest rates and poor sentiment,” Clark said.

Australia’s inability to get inflation under control has seen last year’s interest rate cuts wiped away in just a few short months, while the US Federal Reserve has kept rates on hold at four-year lows.

The future outlook is less certain as the war in the Middle East drives up prices – US inflation hit 3.8% in April – but it has yet to impact earnings growth.

Easy as ABC

While the portfolio manager hailed the performance of companies beyond the tech sector, the biggest success story of the year so far is Google parent company Alphabet (NASDAQ: GOOGL).

“A year ago, it was seen as being AI roadkill for search business. It's now seen as being the poster child of AI with the Gemini business,” Clark said.

“It's also now developing chips, which could rival Nvidia’s at some stage, its cloud storage business is flying and is just completely locked in. They've done an extraordinary job.”

Over the last 12 months Alphabet has soared 134%, while year-to-date it is up around 25% and has a market cap of US$4.8 trillion. The stock remains one of TMS’s largest positions.

Berkshire Hathaway has also thrown its weight behind Alphabet, increasing its holding from around 18 million shares to 58 million shares over the first three months of the year, valued at $17 billion.

The other tech giants have also fared well and the semiconductor index, he pointed out, is up almost 60% so far in 2026.

On the other hand, the software side of the tech market has not shared in the success.

“[Australian] technology shares significantly under perform because they're all software businesses, US software businesses also under performed,” Clark explained.

“Although you can look at some of the software stocks here and think, ‘Oh, they're struggling’, they're struggling because of the AI advances that are catapulting the hyperscalers and semis, which are seen as the potential competitors.”

Ultimately, the combination of a business-friendly US environment and the more restrictive settings locally make the case to look offshore for growth.