European market earnings and investment trends

European equity markets demonstrated resilience and growth throughout late 2026. In September, small and mid-cap stocks gained approximately 8%, supported by upwardly revised corporate earnings expectations and a long-term capital expenditure cycle in sectors such as artificial intelligence, energy, and infrastructure.

By October, projections for the STOXX 600 index indicated an aggregate third-quarter earnings growth of 21%, marking the second-best quarterly profit growth in 14 quarters. This growth was primarily driven by the energy and basic materials sectors, with energy majors expected to see profit growth of 115.9% due to geopolitical tensions affecting fossil fuel exports. Conversely, the real estate sector faced a projected earnings decline of 71.5%.

The technology sector also saw a significant rebound in funding. In September, European startups raised €15.8 billion across 300 deals, a nearly fivefold increase from the €3.2 billion raised in August. The United Kingdom emerged as the top fundraising market, while the French AI company Mistral led the month with a €3 billion Series D round. By the end of the third quarter of 2026, European venture capital reached a four-year high, with total funding hitting $25 billion, with artificial intelligence accounting for 75% of that activity.

However, a widening performance gap has emerged between United States and European equity markets due to the global surge in AI investment. While the STOXX Europe 600 has outperformed the US market when AI-related stocks are excluded, infrastructure investment remains heavily concentrated in North America. Data center capacity is expected to be driven by the US and Canada, accounting for approximately 60% of new capacity, compared to Europe’s estimated 10%. Furthermore, while AI remains a priority for wealth management, some investors have expressed concerns regarding a “potential investment bubble within the next five years.”