The end of US market exceptionalism has begun, says Lazard

• US equity markets face increased risks due to high concentration in AI leaders and elevated valuations.
• Emerging markets offer comparable earnings growth with more diversification across sectors and countries, at significantly lower valuations (9 PE multiples less expensive).
• Japan presents an attractive opportunity due to improved corporate governance, stronger EPS growth, and a valuation discount (4 PE multiples) compared to the US.

Ron Temple of Lazard warns that 2025 marks the beginning of the end for American market exceptionalism, driven by overconcentration in US tech and elevated valuations. He recommends shifting investments towards emerging markets and Japan, citing their diversified growth drivers, attractive valuations, and strong AI value chain presence.