European small and mid-caps show growth amid rising investment cycles

European small and mid-cap stocks have gained approximately 8% in 2026 as of September 20, performing in line with major European indexes despite geopolitical tensions in Iran and rising oil prices.

Market analysis from Bellevue Asset Management indicates a positive outlook driven by rising corporate earnings and economic resilience. Earnings expectations for European companies have been revised upward by roughly 6% since the start of the year, with a projected growth of 14% for 2026. Most sectors have reported positive sales and earnings growth, with the exception of the automotive and consumer discretionary sectors.

Significant investment opportunities are emerging from a long-term capital expenditure cycle, particularly in artificial intelligence, energy, infrastructure, and automation. Recent economic data, including improving manufacturing PMIs and raised GDP growth forecasts for the eurozone and Germany, support a favorable environment for the upcoming third-quarter reporting season.