European stocks face structural headwinds as investors flee the region. Once a cheap alternative to US equities, Europe's market narrative has collapsed amid geopolitical tensions and an AI boom the continent cannot capitalize on. The Stoxx Europe 600 lacks meaningful exposure to artificial intelligence, with technology stocks representing only eight percent of the index compared to forty-two percent for the S&P 500. Europe hosts few AI-essential companies beyond ASML, leaving investors seeking growth with limited options. Earnings forecasts reveal the problem: European companies are expected to grow profits by eleven percent this year, half the rate of US firms. Supply chain disruptions from regional conflicts threaten to further erode these already modest projections.
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