Macquarie Global Strategy has examined the benefits of investing in European assets and states that these assets can provide advantages for investors that have been overlooked in the shadow of the focus on U.S. technology leadership.
Europe's Strong Positions in Global Markets
This analysis focuses on areas where Europe has strong global positions, including luxury goods, tourism, and pharmaceuticals. The luxury goods market and related experiences are valued at approximately $1.6 trillion and are expected to exceed $2 trillion by 2030. European brands such as Hermès, LVMH, and Ferrari dominate this market.
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Competition in Pharmaceuticals and Technology
Europe also generates about $1 trillion from international tourism, which is nearly five times the level of the United States. European and Swiss pharmaceutical groups, including Roche, Novartis, Sanofi, and Novo Nordisk, compete with American companies in science and products.
However, technology remains one of Europe's evident weaknesses. The region has failed to create clusters that have contributed to the productivity and stock markets of the United States, although it still accounts for about 20% of patents.
Growth Potential in Europe
Investment may be less dependent on technology production and more on its adoption. It is expected that about 37% of EU companies will use artificial intelligence by 2025, which is comparable to the level in the United States. Additionally, European businesses are either on par with or surpassing their American counterparts in the use of some advanced digital technologies, particularly robotics.
Valuations and earnings also form another part of this analysis. Europe (excluding the UK) is expected to record earnings per share growth of about 19% by 2026, compared to about 12% expected in December 2025.
European stocks also have a stock risk discount of over 300 basis points compared to the United States. Macquarie believes that the high volume of excess capital in Europe and pressure to increase spending could be drivers for improving stock returns. The return on equity in Europe is about 11%, while this figure is estimated to be nearly 23% for the S&P 500.
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