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Europe set for strongest earnings season in years, but AI gap lingers

LSEG data points to 15.3% expected average Q2 earnings growth for Europe’s blue chips, lifted largely by higher energy profits tied to the Iran war.

Friday, July 17, 2026 · Written up by our desk · Previews

European companies are heading into their strongest earnings season in more than three years, but investors are weighing whether the region has enough AI-driven growth to match the United States, according to Reuters citing LSEG I/B/E/S data. Reuters said second-quarter profits for European blue-chip companies are expected to rise 15.3% on average, the fastest since the last quarter of 2022. Much of that rebound reflects an anticipated surge in energy earnings as crude prices have been pushed higher by the Iran war. Excluding energy, the earnings picture looks weaker. Reuters reported that non-energy firms in Europe’s STOXX 600 are forecast to post average earnings growth of 6.0% in the quarter, versus 19.6% for S&P 500 companies, based on the same LSEG dataset. Morgan Stanley Investment Management’s Jitania Kandhari said the gap is likely to narrow over time because Europe should “pick up,” but she expects a difference to persist next year given the strength of U.S. AI earnings. JPMorgan Private Bank’s Nataliia Lipikhina added that Europe may need a catalyst similar to last year’s German fiscal stimulus, while Reuters noted that with expectations already largely reflected in valuations, markets may focus more on demand and profit outlooks into 2027 than on the results themselves. Reuters also highlighted early AI-related signs from ASML, which raised its 2026 sales forecasts after beating second-quarter earnings expectations, while higher energy prices are weighing on consumer sentiment and pressuring sectors such as autos.

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