European corporate profit growth hits three-year high, but AI widens gap with US despite energy strength

EarningsCommodity

โดย ロイター·Read original

Summary · why it matters

Major European companies are expected to post their highest profit growth in more than three years for the April-to-June quarter of 2026, driven by a strong performance from the energy sector. According to LSEG I/B/E/S data, profits for leading European firms are forecast to rise 15.3 percent year on year, the fastest pace since the October-to-December quarter of 2022. The main driver is the energy industry, where rising crude oil prices amid the Iran conflict are set to boost earnings at oil and gas majors. In contrast, US companies are projected to see average profit growth of 23.7 percent, but excluding energy firms the transatlantic gap widens further. Non-energy companies in the STOXX Europe 600 index are expected to grow profits by just 6 percent, while their counterparts in the US S&P 500 are forecast to increase earnings by 19.6 percent. Jitania Kandhari, deputy chief investment officer at Morgan Stanley Investment Management, said US companies with strong AI-related revenues are likely to maintain their edge for now, but European firms will gradually catch up. Natalia Lipikhina, head of EMEA equity strategy at J.P. Morgan Private Bank, remains cautious given slowing European economic growth, and said a fresh catalyst like last year's German fiscal stimulus is needed for European markets to rally meaningfully. With April-to-June results already largely priced in, more attention will focus on how companies view demand and profit outlooks for 2026 to 2027. Dutch semiconductor equipment giant ASML reported better-than-expected quarterly results on the 15th and raised its 2026 revenue forecast, drawing market interest as an example of a European company benefiting from expanding AI-related investment. However, the environment for European firms is not uniformly bright. Christoph Berger, CIO for European equities at Allianz Global Investors, noted that rising energy prices are weighing on consumer sentiment and creating headwinds for sectors like autos, which already face slowing demand in China. Next week, Swiss pharmaceutical major Novartis, Italian banking giant UniCredit, German software leader SAP, and German auto powerhouse Volkswagen are among those set to report results, providing key signals for European corporate earnings trends.

ASML Holding N.V. ▲