Strategists at Goldman Sachs and JPMorgan are among the most vocal on Wall Street about a brighter outlook for European stocks, adding to a growing chorus of banks pointing investors back toward a region that has often played second fiddle to US markets in recent years.
The bullish case rests heavily on valuation. European shares have traded at a persistent discount to their US counterparts for years, and strategists making the case for the region argue that gap has grown wide enough to look attractive even after accounting for Europe's slower growth and heavier regulatory environment. A weaker dollar relative to the euro has also made European assets more appealing to international investors converting returns back into other currencies.
Corporate earnings have played a role too, with several European sectors, including banks, industrials and defense contractors, posting stronger results as governments across the continent ramp up spending on infrastructure and military capability. That spending has become a bigger part of the investment story in Europe as countries respond to a shifting security landscape.
Not every strategist on Wall Street shares the optimism, and some continue to argue that US markets, powered by dominant technology companies, remain the safer bet for growth focused investors. The debate over which region offers better value has become a recurring theme in bank research notes throughout the year.
Investors are expected to keep watching upcoming earnings reports and central bank decisions on both sides of the Atlantic for signals on which view will hold up.