Markets shift toward growth assets globally; AI-driven revenue up ~20%, fastest four years.

Markets shift toward growth assets globally; AI-driven revenue up ~20%, fastest four years.

Gold dollar, petrodollar, technodollar: the USD’s next phase | Julius Baer

The international monetary system has always rested on a single pillar – the global reserve currency. Looking back over the past 100 years, first there was the gold standard, i.e. the promise of value anchored in something finite, hard, and scarce. In the early 1970s, the gold‑backed system was replaced by the petrodollar, which thrived on energy dominance, geopolitical reach, and the recycling of oil revenues through the US financial system. Today, our currency analysts claim that markets are increasingly sensitive to a different backing, the technodollar – a currency system underwritten by digital infrastructure, platform power, and the global scramble for AI capacity.

AI spending revives growth as markets look past the energy shock

This assessment is supported by the latest news flow, with bourses quickly tilting back towards growth assets. Even with the Strait of Hormuz still making headlines, the market is already looking past the energy shock. The US economy is thriving on major AI spending, and recent quarterly earnings reports supported that story with hard numbers. Hyperscalers delivered blowout results and showed that they can monetise their capital expenditure. Revenue grew nearly 20%, the fastest pace in four years, which is all the more impressive given that the revenue base was roughly 50% larger than back then.

Unsurprisingly, the equity rally has broadened out into semiconductors, where investors see the cleanest operational leverage on the AI build‑out. What does this all mean for investors? First, it is no longer a simple ‘US exceptionalism’ story. The boom is spreading across the board, most visibly through Asia, where semiconductor and digital infrastructure stocks are increasingly central to the global AI supply chain. Second, as the negative impact on energy fades in market perception, portfolios should remain globally diversified rather than overly anchored in one geography. Our bias remains towards US and Asian technology, paired with European value, especially banks. In short, investors should keep exposure to the technodollar but not neglect the valuation discipline offered elsewhere.

Why the petrodollar is fading and the dollar still dominates

Against this backdrop, geopolitics has revived the petrodollar debate, prompting a closer look at what remains of the oil‑dollar link. Recent US intervention in Venezuela and actions against Iran have increased the prominence of the petrodollar narrative. This narrative posits a link between oil and the US dollar, suspects a hidden strategy behind US actions, and alludes to the broader de‑dollarisation theme. The facts do indeed point to an end of the petrodollar system, but not necessarily because of geopolitics. Rather, that system has been overtaken by innovation.

The shale oil boom created an abundance of supply that put pressure on prices and turned the US from a net oil importer into a net exporter. As a consequence, the correlation between the US dollar and oil prices has partially switched from negative – a characteristic of the petrodollar era – to positive. These developments suggest that the petrodollar cannot be reinstated by hegemony alone. Today’s conflicts appear detached from this new oil‑dollar regime.

Western sanctions on Russia and Iran have nourished the so‑called ‘pariah oil market’ and encouraged the trade of oil in other currencies. However, this trade remains a niche and reflects economic necessity rather than geopolitical strategy. Whether this contributes meaningfully to de‑dollarisation is doubtful. While a diversification away from the US dollar is observable, it is slow‑moving and not necessarily about the demise of the greenback as the global reserve currency. Ultimately, the dollar’s dominance rests on systemic financial, institutional, and geopolitical foundations, and not on oil. For the time being, these foundations remain only a little challenged. In terms of transaction volumes, regular foreign‑exchange trading activity dwarfs the size of the global oil market, debunking beliefs that less dollar‑denominated oil trade could significantly devalue the USD exchange rate.

Climate Week in Switzerland: an energy shock that accelerates change

Even as markets refocus on AI and digital dominance, it is Climate Week in Switzerland, making it worthwhile to look at the energy transition. Any crisis tends to accelerate ongoing structural shifts, and this time is likely no different. The current energy shock primarily affects the oil market and thus road fuels. The region most hit by the initial road fuel shortages was that comprising the emerging economies of Asia. At the same time, this region is experiencing a structural shift towards electric mobility, as shown by our Number of the Week below.

Domestic and foreign automakers are setting up shop in countries such as Vietnam and Indonesia, focusing on state‑of‑the‑art manufacturing of electric cars and two‑wheelers. On top come imports from China, where automakers are seeking shelter abroad from overcapacities and margin erosion in their home market. To assess the impact of the fuel shock on the energy transition, it is worth focusing on Southeast Asia’s auto markets. Data so far is somewhat inconclusive but comes with anecdotes of strong buyer interest and growth in plug‑in market shares for recent months. Estimates suggest that market share in Vietnam reached around 50% in March.

While it may still be too early to tell how big a boost the energy shock will be for the energy transition, the overall direction of travel seems clear. Chinese automakers lead the way and show that manufacturing plug‑in vehicles comes with lower costs compared to combustion engine counterparts, thanks to reduced complexity and greater scalability. With ever‑more models on the market that match an ever greater spectrum of individual needs, plug‑ins appear to be in the midst of a fast‑paced S‑type adoption curve. The broader ecosystem, including charging infrastructure, is expanding over time.

From an investment perspective, however, there are caveats to the growth story. Competition for market share is intense, not only in China, driven by structural investment booms and overcapacities. As a result, we stick to our Neutral view on the theme for now. Even in a market ruled by AI, the long‑term transformation of the real economy remains part of the bigger investment story.

What investors need to keep in mind

Taken together, the shifting focus from energy dominance to digital leadership highlights how the foundations of growth and currency influence continue to evolve. While markets are currently driven by AI spending, platform power, and global technology supply chains, older regimes such as the petrodollar are fading for structural rather than geopolitical reasons. At the same time, Climate Week in Switzerland serves as a reminder that longer‑term transformations in energy and mobility are unfolding alongside the AI cycle. For investors, this argues for staying engaged with the technodollar while remaining globally diversified and mindful that technological, energy, and real‑economy transitions are increasingly intertwined.