Goldman analyzes foreign sales exposure of U.S. firms

Investing.com -- Goldman Sachs has published a fresh analysis of U.S. corporate revenue exposure to international markets, revealing that foreign sales made up 28% of S&P 500 revenues in 2024, unchanged from the prior year.

The breakdown shows that Asia Pacific accounted for 10% of total sales, with 2% coming from Greater China and 1% from Japan.

Europe contributed 5%, and just 2% of revenues were attributed to Canada and Mexico combined. The United States remains dominant, representing 72% of total revenues.

By sector, Information Technology remains the most globally exposed area, with 56% of revenues coming from abroad.

Within that, the Semiconductor and Semiconductor Equipment industry stands out, with 67% of its revenue sourced internationally.

Materials and Energy also have notable foreign exposure, at 49% and 37%, respectively.

At the other end of the spectrum, Utilities remain heavily domestic, with just 2% of sales derived overseas.

The report draws on company 10-K filings, supplemented by Goldman Sachs’ estimates and presentations. The bank cautions that “firms have discretion over regional classifications, so precision varies by company.”

The data also reflect that roughly one-quarter of S&P 500 firms report zero international revenue, suggesting the commonly cited figures may overstate the true aggregate exposure if such firms are excluded from the analysis.

Goldman’s sector-neutral basket of stocks with the highest international sales exposure has returned 11% year-to-date, outperforming its domestic counterpart, which gained just 4%. “

The 7% YTD weakening of the trade-weighted U.S. dollar has supported the stock performance of international-facing US companies,” the Wall Street firm wrote.

It also rebalanced its revenue-based thematic baskets. These baskets are designed to be sector-neutral, making them suitable for relative performance analysis or long/short strategies. The international basket has a median of 70% non-U.S. revenue exposure, compared to zero for the domestic basket.

In terms of profitability, Goldman notes that foreign markets contributed 13% of overall U.S. corporate profits in 2024, according to Bureau of Economic Analysis (BEA) data.

This supports the view that revenue exposure is a reasonable proxy for profit exposure, particularly among large-cap companies.

“The BEA data show slightly less international exposure because they cover all public and private U.S. corporations. However, our revenue analysis reflects only the largest U.S. companies, which tend to do more business internationally,” the report states.

For instance, the Russell 2000 derives 20% of revenue abroad versus 28% for the S&P 500. Still, BEA profit data broadly align with Goldman’s revenue findings, supporting the view that foreign revenue exposure also reflects profit exposure for large companies.