European Earnings Growth to Slow in 2027

Dow Jones
Yesterday

1311 GMT - European corporate earnings growth will slow in 2027 as inflation bites on margins, Goldman Sachs analysts write. Earnings growth will normalize in the mid-single digits next year, down from the analysts' 15% forecast for 2026. However, there is a greater likelihood of earnings surprising to the upside rather than the downside next year given structural tailwinds behind sectors like technology and industrials, they say. European stocks are valuable as diversifiers, given the continent's limited weighting toward technology. Whereas U.S. hyperscalers have eroded their cash reserves in the pursuit of AI development--a trend causing investors increasing concern--European companies have healthier cash flows on average, the analysts note. The Stoxx 600 is up 8.9% so far this year, compared to gains of 11.5% for the S&P 500.

 

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