The music is ( unfortunately and right now ) playing elsewhere

European equities are getting cheaper again. The Stoxx Europe 600 now trades at roughly a 30% valuation discount to the S&P 500, well above the historical average. But this gap increasingly reflects a structural divergence rather than a temporary anomaly.
The US continues to benefit from the AI CAPEX cycle led by hyperscalers and semiconductors, while Europe has only limited exposure to this theme. At the same time, the Middle East conflict has once again highlighted Europe’s dependence on imported energy and its vulnerability to inflation shocks. In local currencies, German Dax is as of Friday down 2.2% since the beginning of the year while the S&P 500 is up 8.2% ( price indices ).
Cheap valuations alone are not enough. Markets ultimately follow earnings growth and strategic positioning. Europe still offers many quality companies with undervalued earning power, but the tech music — apart from a few exceptions — currently plays elsewhere.