Comeback for Europe’s Bull Market?

European equities have staged a significant recovery, matching S&P 500 performance year-to-date as investors increasingly seek diversification away from U.S. technology volatility. Marina Zavolock, Chief European Equity Strategist at Morgan Stanley, highlights that while Europe is often perceived as lacking tech exposure, roughly 15% of its index is tied to the AI capital expenditure boom through semiconductors, hardware, and copper mining. A critical shift occurred on January 1st when European valuations broke a decade-long structural downtrend relative to the U.S., signaling a narrowing discount. Despite low regional GDP growth, European corporate revenues are highly globalized, with only 45% derived domestically. Current investment preferences favor a data-driven mix of AI-exposed sectors like semiconductors and capital goods alongside high-distribution banks and under-owned utilities, which benefit from structural trends in AI adoption and renewable energy.