Barclays strategists: European corporate earnings performance is solid, and the gap in earnings growth between Europe and the US is narrowing.

Barclays strategists say European equities remain attractive, boosted by market concerns over the AI sector, with regional earnings showing resilience. The team led by Emmanuel Cau and Magesh Kumar Chandrasekaran said: "In our view, the relative risk-reward of European assets is fair." The strategists said earnings performance this reporting season is only slowing, not deteriorating; European EPS growth is narrowing the gap with the US. Supported by AI capital expenditure and energy tailwinds, earnings momentum at this stage of the cycle is unusually strong. They believe that weakening cash flow and continued increases in capital spending at large cloud service providers mean market concerns about AI may persist, which would marginally benefit European stocks.