European assets may offer investors advantages that are being overlooked as markets remain heavily focused on U.S. technology leadership, according to Macquarie Global Strategy, which sees structural changes supporting stronger European returns
The argument centers on areas where Europe already holds strong global positions, including luxury goods, tourism and pharmaceuticals, alongside signs that businesses are adopting new technology at rates comparable with the U.S.
Luxury goods and experiences represent a roughly $1.6 trillion market that is expected to exceed $2 trillion by 2030, dominated by European brands including $Hermes, $LVMH and Ferrari.
Europe also generates about $1 trillion from international tourism, roughly five times the U.S. level. European and Swiss pharmaceutical groups including Roche, Novartis, Sanofi and Novo Nordisk are competitive with U.S. companies in science and products.
Technology remains Europe’s most visible weakness. The region failed to create the clusters that powered U.S. productivity and equity markets, though it still accounts for about 20% of patents.
The investment case may depend less on producing technology than adopting it. About 37% of EU companies used artificial intelligence in 2025, comparable to the U.S., and European businesses match or exceed American peers in the use of some advanced digital technologies, particularly robotics.
Valuations and earnings provide another part of the argument. Europe excluding the U.K. is expected to record earnings-per-share growth of about 19% in 2026, compared with roughly 12% expected in December 2025.
European equities also retain an equity risk premium discount of more than 300 basis points relative to the U.S.
Macquarie sees Europe’s large pool of surplus capital and pressure for higher spending as potential drivers of improving returns on equity. European ROE is around 11%, leaving scope for improvement, compared with roughly 23% for the S&P 500.
#S&P500 $RACE.US
The argument centers on areas where Europe already holds strong global positions, including luxury goods, tourism and pharmaceuticals, alongside signs that businesses are adopting new technology at rates comparable with the U.S.
Luxury goods and experiences represent a roughly $1.6 trillion market that is expected to exceed $2 trillion by 2030, dominated by European brands including $Hermes, $LVMH and Ferrari.
Europe also generates about $1 trillion from international tourism, roughly five times the U.S. level. European and Swiss pharmaceutical groups including Roche, Novartis, Sanofi and Novo Nordisk are competitive with U.S. companies in science and products.
Technology remains Europe’s most visible weakness. The region failed to create the clusters that powered U.S. productivity and equity markets, though it still accounts for about 20% of patents.
The investment case may depend less on producing technology than adopting it. About 37% of EU companies used artificial intelligence in 2025, comparable to the U.S., and European businesses match or exceed American peers in the use of some advanced digital technologies, particularly robotics.
Valuations and earnings provide another part of the argument. Europe excluding the U.K. is expected to record earnings-per-share growth of about 19% in 2026, compared with roughly 12% expected in December 2025.
European equities also retain an equity risk premium discount of more than 300 basis points relative to the U.S.
Macquarie sees Europe’s large pool of surplus capital and pressure for higher spending as potential drivers of improving returns on equity. European ROE is around 11%, leaving scope for improvement, compared with roughly 23% for the S&P 500.
#S&P500 $RACE.US