The brighter outlook for European equities this year is starting to show up in corporate earnings estimates as the US artificial intelligence trade draws skepticism.
Analysts have raised expectations for European profits in 2025 by 0.6% since the start of the year, according to data compiled by Bloomberg Intelligence. At the same time, the figures show US earnings projections have dropped about 1% in the past month, led by semiconductors ahead of Nvidia’s report this week.
While the US estimates are being cut from a much higher level, the trend nonetheless bodes well for Europe’s benchmark Stoxx 600 Index, which is on track for its best first-quarter performance relative to the S&P 500 in 10 years.
Investors have been drawn by cheaper valuations, as well as optimism around fiscal reform following the German elections and hopes for a ceasefire in Ukraine.
In the US, the technology heavyweights have trailed this year on worries about hefty spending on AI. The focus in Nvidia’s quarterly report — due Wednesday — will be on the growth outlook as it deals with supply challenges and potentially tighter controls on sales to China.
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Nvidia’s shares haven’t yet fully recouped the declines they suffered in late January on concerns that demand for its products would wane following the success of Chinese chat-bot startup DeepSeek.
Still, some Wall Street strategists including Morgan Stanley’s Michael Wilson see US earnings remaining healthy overall and a robust economic outlook keeping the flight from American assets short-lived.
