Recent financial reports indicate that major European companies have experienced a 15.3% profit increase in the April-June quarter of 2026, the highest growth rate in three years, primarily driven by the energy sector. However, this surge highlights a significant disparity in artificial intelligence revenue between Europe and the U.S., raising concerns about the long-term sustainability of European corporate growth.
The STOXX Europe 600 Index constituents are projected to see profits rise at this notable rate, largely due to substantial earnings from oil and gas companies benefiting from elevated crude oil prices amid geopolitical tensions. In stark contrast, U.S. corporate profit growth is expected to reach 23.7% for the same period, indicating that European firms are lagging behind by over eight percentage points.
When excluding energy companies from the analysis, the earnings gap widens; profit growth for European non-energy firms is a modest 6%, while U.S. firms in the S&P 500 are anticipated to achieve a 19.6% increase. This discrepancy is significantly influenced by the presence of AI-related revenue streams in the U.S., particularly among semiconductor manufacturers and hyperscale cloud service providers, sectors that remain underdeveloped in Europe.
Experts express mixed views on Europe's potential to close this gap. Jitania Kandhari from Morgan Stanley is optimistic, suggesting that Europe will gradually catch up. Conversely, Natalia Lipikhina from J.P. Morgan warns that without a significant catalyst, such as fiscal stimulus, the European market may struggle to gain momentum, making other regions more appealing for investors.