2023 will be the year where international stocks outperform their U.S. peers as the economic outlook in China and Europe looks less dire, according to Goldman Sachs. "China- and Europe-exposed stocks have moved to price the improved growth outlook," David Kostin, Goldman's head of U.S. equity strategy, said in a note. "We expect non-US equities to outperform the S & P 500 in 2023, and many clients agree." The forecast followed recent developments that the sudden reversal of China's zero Covid policy prompted the country to reopen more swiftly than expected. The better outlook in China in turn is expected to boost output in Euro area, Goldman said. Meanwhile, a milder-than-feared winter in Europe has diminished gas demand and pushed prices below pre-war levels, the firm said. "Our economists upgraded their GDP forecasts in both regions and no longer expect a Euro area recession this winter," Kostin said. One way to play the trend is through companies with foreign revenue exposure, according to Goldman. The Wall Street firm said its China Sales Exposure basket, which contains Russell 1000 companies with the highest sales exposure to China, has outpaced the S & P 500 by 5 percentage points as the dollar declined. The companies with prominent revenue exposure to China were concentrated in semiconductor names, including Monolithic Power Systems , Qualcomm , Nvidia , Texas Instruments, Applied Materials , KLA , Lam Research and Western Digital . Investors should also look at S & P 500 stocks with high international sales exposure, Goldman said. The firm's basket of such stocks has outpaced domestic-facing firms by 4 percentage points year to date. Netflix is one of the stocks with high international revenue exposure. Travel-related names Las Vegas Sands and Booking Holdings were also on the list. The Domestic Sales basket is now trading at a 19% discount to this foreign-facing counterpart, nearly double the average discount since 2018, Goldman said. "If our FX strategists' views for dollar weakening later in 2023 come to fruition, it should continue to lag," Kostin said.