Europe’s Best Earnings Season in Years Can’t Close the AI Gap

European blue-chip profits are set to jump 15.3% this quarter, the fastest pace since late 2022, according to LSEG data. Strip out energy earnings and that growth falls to just 6%, while non-energy profits in the United States are still running above 19%. Energy is the reason the headline number looks so strong.

Investors are not applauding blindly. Wall Street’s AI-fueled profit machine keeps compounding, and Europe still does not have one of its own to match it.

Energy Profits Are Doing Most of the Work

The rebound is real, on paper. Second-quarter profits at European blue-chip companies are expected to grow by 15.3% on average, the fastest pace since the fourth quarter of 2022, according to LSEG I/B/E/S data. Much of that surge traces back to energy company profits, lifted by higher crude prices tied to the war in Iran.

Earnings at U.S. companies are forecast to grow 23.7% on average over the same period, the same data shows. Exclude energy from both sides and the comparison looks worse for Europe. Non-energy companies in the STOXX 600 are forecast to report a 6% increase in earnings this quarter. Their S&P 500 counterparts are expected to deliver 19.6% growth.

Revenue tells a similar story. STOXX 600 sales are forecast to rise 10.5% overall this quarter, but just 3.9% once energy is stripped out, separate LSEG-based estimates show. Eight of ten sectors are expected to grow this quarter, more than in the first, but energy profits alone are on pace to more than double.

How Big Is Europe’s AI Spending Gap?

Europe spends a fraction of what the United States puts into artificial intelligence. Annual AI venture investment runs $60 billion to $70 billion in the US, against roughly $7 billion to $8 billion in the EU, and American firms have produced 40 AI foundation models to Europe’s three.

The disparity shows up in daily use, too. Researchers found that 43% of American workers used AI on the job in 2026, versus 32% of workers surveyed across six European countries. Scaled up, that adoption gap translates into meaningful lost ground for Europe on productivity.

• 72% – the share of Europe’s cloud computing market controlled by U.S. hyperscalers, with EU-based providers holding less than 20%.
• €200 billion – the total the European Commission’s InvestAI initiative aims to mobilize for AI infrastructure, including €20 billion for up to five AI “gigafactories.”
• 43% vs. 32% – the share of American workers who used AI on the job in 2026, compared with European workers, per the Federal Reserve Bank of St. Louis.
• 3.2 percentage points – the estimated extra cumulative U.S. productivity growth since 2022 tied to that adoption gap, the same research found.

The gap is mostly about who builds AI, not who buys it. Indian IT services firm HCLTech signed a $1.14 billion AI deal with a European Fortune 50 firm this year, evidence that demand for AI services in Europe has not disappeared even as the supply side stays overwhelmingly American.

ASML’s Big Beat Comes with a Concentration Problem

If Europe has one AI-linked earnings story investors can point to this quarter, it is ASML. The Dutch company is the world’s biggest supplier of chip-making equipment, and on Wednesday it raised its 2026 sales forecast after posting second-quarter results that beat expectations across the board.

ASML reported €9.3 billion (about $10 billion) in second-quarter net sales and €2.9 billion in net income, with revenue up 21.3% from a year earlier and beating analyst estimates by roughly €400 million. Basic earnings per share came in at €7.59, also ahead of forecasts.

The company now raised its full-year sales outlook to €43 billion to €45 billion, up from the €36 billion to €40 billion range it had forecast three months earlier. It guided for third-quarter sales of €11 billion to €12 billion.

ASML’s biggest customers, though, are chipmakers like TSMC, Samsung, Intel, SK Hynix and Micron. None are European. The same machine driving Europe’s best tech earnings story this quarter is selling almost entirely into someone else’s AI buildout.

“There’s a lot of AI-related infrastructure investments. This does help many European industrials,” said Christoph Berger, chief investment officer for equity Europe at Allianz Global Investors, an asset manager. He pointed to semiconductor names when describing where the spillover shows up.

The Widening Small-Cap AI Divide

Europe’s AI story splits again once large companies are separated from small ones. Accenture’s first AI Progress Barometer, published in June, scored large European companies, those with more than $10 billion in annual revenue, at 47.4 out of 100 on AI readiness, just 2.1 points behind their North American peers at 49.5.

Smaller European companies fared worse. They scored 7.6 points behind North American peers, at 40.5 versus 48.1, a long tail that Accenture’s own researchers said could weigh on the region’s competitiveness for years.

“Europe is clearly building real momentum in AI, mainly driven by its largest companies,” said Mauro Macchi, chief executive for Europe, the Middle East and Africa at Accenture, the consulting firm. “They understand that for AI to deliver more value, faster, it requires enterprise-wide reinvention, not just plug-and-play adoption.”

The scale gap shows up in infrastructure spending too. Meta alone is putting $13 billion into a single data centre complex in Alberta, Canada, complete with its own dedicated gas plant to keep the servers powered. Brussels, by comparison, has earmarked about €20 billion in public money for up to five AI gigafactories across the entire European Union.

Novartis, SAP and Volkswagen Face a Guidance Test

Second-quarter numbers are mostly already priced into share prices. What companies say about 2027 will matter more to investors than what they report for the past three months.

Novartis, the Swiss drugmaker; UniCredit, the Italian lender; SAP, the German software company; and Volkswagen, the German carmaker, all report next week. Each result is expected to offer clues on the health of the wider European corporate sector.

Higher energy prices have hurt consumer sentiment, adding pressure on sectors such as autos that are already facing weaker demand in China, Berger said.

Separately, analysts have said they are watching three things this season: how far the energy shock transmits down the value chain, how exposed European companies are to competition from China, and what management teams say about AI usage and related cost reductions.

Analysts Split on When the Gap Closes

Not everyone agrees on the timeline.

• Jitania Kandhari, Morgan Stanley Investment Management – the deputy chief investment officer of its solutions and multi-asset group expects some narrowing but said “there will still be a gap next year because the U.S. has very strong, powerful AI earnings.”
• Deutsche Bank strategists – forecast the earnings growth gap “will start narrowing from Q2 and might close in Q4.”
• Nataliia Lipikhina, JPMorgan Private Bank – the head of EMEA equity strategy is skeptical without a jolt like last year’s German fiscal stimulus, and the bank prefers U.S. and emerging-market stocks over European ones.

Expectations for AI-linked companies remain high regardless of who is right. Investors are unlikely to reward them simply for meeting forecasts, said Martin Frandsen, a portfolio manager at Principal Asset Management. They will need to deliver strong messages instead, he said.

“It’s probably not enough to get in line. It’s probably not even enough just to get ahead,” Frandsen said.

ING economists have made a similar wager, expecting European AI investment and usage to accelerate without closing the gap with the US through the rest of 2026.

Reporting kicks off in earnest next week, and more than 90% of the STOXX 600’s market capitalization will have reported by the end of August, according to Goldman Sachs.