European Stocks Hit Records as Investors Reassess AI Bets

The Stoxx Europe 600 rose 0.3% in early afternoon trading, a day after it closed at a record for the first time since August. European indexes have outperformed their U.S. counterparts during a strong month for the region’s shares: the Stoxx is up 5% over the past month, while the S&P 500 has fallen 3.5% and the Nasdaq is down 8% over the same period.

Nvidia’s leadership crisis has added to pressure on U.S. markets and helped redirect money toward European shares, according to Kathleen Brooks, research director at XTB. “The slump in Nvidia that is dragging down U.S. indices is helping to spur a rotation into European markets that are traditionally low-tech,” she said.

Europe’s market has a large weighting in less technology-focused sectors, including healthcare, which investors often favor when riskier companies show signs of stress. AI-related stocks have fallen sharply over the past month as investors reassess the health of companies tied to the technology, a shift that has coincided with stronger European equities.

Earlier this week, Citi strategists upgraded their view on European stocks excluding the U.K. to overweight and cut U.S. equities to neutral. They cited the risk that AI-linked stocks could fall further.