Investors are actively shifting their assets from the United States to Europe, a trend observed throughout 2025 according to Valerie Urbain, CEO of Euroclear. This diversification is largely attributed to market turbulence generated by former President Donald Trump, leading to a growing interest in European assets from regions including China, the Middle East, and Asia-Pacific. Amelie Derambure, a senior multi-asset portfolio manager at Amundi SA, confirmed this shift, stating they had reduced exposure to the U.S. and rotated partially into Europe before the recent earnings season, anticipating strong European performance.
This move to Europe is also influenced by concerns regarding the high concentration and weight of the broad AI theme in U.S. markets. While S&P 500 firms are on track for a 29% surge in second-quarter earnings per share, investors have become more disciplined about paying higher valuations for large-cap technology. Conversely, Europe is delivering improved profit expectations across a broader range of sectors, with Stoxx 600 members posting a 19% surge in profits, contrasting with barely any growth in the prior two years, according to Barclays Plc data.
Citadel Securities forecasts that AI chip purchasing could lead to over $500 billion in new debt issuance by 2028, potentially comprising more than 5% of the Bloomberg US high-grade index. Jeff Eason, Citadel Securities' head investment-grade desk analyst, stated that global markets have already absorbed about $570 billion in AI-related debt, much of it from hyperscalers like Amazon, Microsoft, and Google. This substantial borrowing for AI infrastructure, coupled with AI developers like OpenAI and Anthropic seeking financing while generating negative cash flow, indicates a significant shift in capital allocation and credit spreads within the broader AI industry.
