For two years, the story of global stock markets is mostly a story about artificial intelligence. This week, Europe tells a different one. The STOXX 600, the main index of large European companies, closes at a record high on Wednesday and climbs higher again on Thursday, while Wall Street struggles. The reason is simple. As investors grow nervous about AI, they are looking for markets that depend on it less, and Europe suddenly looks like a very good place to be.
A difficult autumn for tech
The move away from technology begins in October. Investors start to question how much the biggest US tech companies are spending on AI, and how long it will take for that spending to pay off. Share prices fall sharply. By the middle of November, US technology stocks are down by more than 11% since the start of October.
The US midterm elections add to the pressure. Democrats win control of both houses of Congress, and some investors expect stricter oversight of the AI industry as a result. Then, on Thursday, Nvidia, the chipmaker at the centre of the AI boom, confirms the sudden resignation of its chief executive, Jensen Huang. Colette Kress, the company’s finance chief, steps in as interim chief executive while Nvidia searches for a permanent replacement. Its shares close more than 4% lower.
For investors who lean on a few AI winners, the question is now a practical one: where else can the money go?
Why Europe benefits
Europe’s answer is that it simply has fewer AI giants. Analysts say the region’s smaller exposure to AI-linked stocks makes it less vulnerable when that trade turns. While investors sell out of AI-related shares in the US and Asia, European markets avoid much of the damage.
Europe also has something to show for itself. Companies in the STOXX 600 are on track for profit growth of around 25% in the third quarter, the strongest in four years, according to data compiled by LSEG. Industrial group Siemens raises its growth outlook this week, and its shares jump almost 4%. German drugmaker Merck raises its profit forecast for 2026 for the third time this year. Energy companies are among the biggest contributors to the profit surge.
Lower oil prices help too. Brent crude falls back below $100 a barrel this week as concerns about further escalation in the Middle East ease. For a region that imports most of its energy, that takes some pressure off businesses and households. By Thursday, the STOXX 600 is up almost 5% since the start of October. Over the same period, the S&P 500 in the US is slightly down.
Following the money
The data on fund flows shows the shift clearly. In the week to 4 November, funds that invest in European shares attract more than $13 billion of new money, the largest weekly inflow since August, according to LSEG Lipper.
Much of that money comes from across the Atlantic. On Friday, Goldman Sachs raises its 12-month target for the STOXX 600 to 700 points, from 695. “Investors, especially from the US, are putting increasing amounts of money into Europe,” the bank says, adding that much of it arrives through global investment funds rather than funds focused only on Europe.
This suggests the move is about more than short-term trading. Large investors are reducing their reliance on one sector and one country.
A record under pressure
Europe is not completely protected, however. On Friday morning, the STOXX 600 slips back from its record as the Nvidia news continues to weigh on technology shares. European chipmakers Infineon and Aixtron each fall about 2%. “There is a little bit of a knock-on effect as tech sector has come under pressure given the fallout from Nvidia,” says market analyst Fiona Cincotta. Even so, the index remains on course for a weekly gain of more than 2%, its best since June.
There are also reasons for caution. Goldman expects European profit growth to slow sharply next year, from 18% in 2026 to 7% in 2027, partly because energy earnings are likely to fall. The bank also points out that Europe’s valuation gap with the US is narrowing mainly because US shares are getting cheaper, not because European shares are getting more expensive. Nvidia itself now trades at its lowest valuation compared with expected profits since 2012, which may tempt some investors back.
For now, Europe’s record run reflects strength and good timing in equal measure. Its companies are reporting solid results at the exact moment investors want an alternative to AI. If confidence in technology returns, some of that money may flow back to Wall Street. But this week sends a clear message. When one market loses its shine, investors move quickly, and Europe is ready to receive them.
