Europe’s Best Earnings Quarter in Three Years: An Energy Story, Not an AI One
Strip out the energy sector and the continent grew 6% against America’s 19.6%
European companies are heading into their strongest quarterly earnings season in more than three years, with almost none of it attributed to AI.
STOXX 600 constituents are forecast to grow second-quarter profits by 15.3% year on year, according to LSEG I/B/E/S data compiled by analyst Tajinder Dhillon. This would be the strongest quarter since the final three months of 2022.
However, strip out energy, and the growth rate plummets to 6%. In contrast, the equivalent figure for the S&P 500 is 19.6%.
The gap between European and American performance highlights a crucial point: while tech adoption and AI advancements are significant, energy sector strength is driving Europe’s current earnings growth.
The Impact of Energy Prices on Earnings
Energy is the standout performer, with LSEG forecasting 112.4% earnings growth and 45.7% revenue growth. Healthcare, in contrast, lags with a minus 2.4% growth rate.
The primary driver of this disparity is the surge in crude oil prices. Brent averaged $103.28 per barrel in Q2 2026 compared to $68.01 in the same period last year, a 52% increase. This is primarily due to geopolitical tensions, notably the conflict between the US and Israel/Iran.
ASML: A Bright Spot in AI-Linked Earnings
While energy dominates the earnings narrative, it’s worth noting the usual standout in AI-related earnings:
ASML reported second-quarter net sales of €9.33 billion, exceeding guidance, with a strong gross margin and net income. They raised full-year sales guidance for the second time this year, indicating continued demand for their advanced technologies, including those linked to AI investments.