In January 2025, according to Bank of America Global Research's "Make Europe Great Again" survey, European equities are making a comeback, recording their second-largest influx of investors in the last 25 years. It's about time. After all, investors largely shunned Europe in 2024.

While the S&P 500 index rose by 23.3% in 2024, Europe's blue-chip index, the Stoxx Europe 600, rose by just 8.78% over the same period. A deceptive gap, according to Howard Silverblatt, senior analyst at S&P Dow Jones Indices, as the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) accounted for more than half the rise in the US index. Goldman Sachs, meanwhile, estimated that the other 493 companies making up the S&P 500 gained just 6% over the same period. That's less than the performance of the Euro Stoxx 50. Will they do better this year? For 2025, anticipated growth in the US is 2%, and US corporate profits are expected to rise by 10%.

"If growth slows, we could witness a contraction in valuations," explained Frédéric Leguay, equity specialist at Ostrum Asset Management, who draws attention to the US market's good returns. "Historically, after two consecutive years of returns over 20%, the S&P 500 tends to slow down. Over 40 years, the market's average annualized return is around 9 %," Claudia Panseri, chief strategist at UBS France, found.

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