What’s Driving European Stocks in 2026

The podcast explores the outlook for European equities in 2026, particularly in comparison to the U.S. equity market. It highlights that European equities have outperformed U.S. equities since the U.S. elections in constant currency terms and have recently broken a 10-year discount range, potentially signaling a period of narrowing discounts. While U.S. earnings growth is projected to be significantly higher, the adoption of AI in Europe is presented as a key factor that could drive earnings and returns outperformance. Sectors like banks, defense, and those related to powering AI are favored, while autos, chemicals, luxury, transport, and food & beverage are sectors to avoid due to low growth and increasing competition.