BCA Research Urges Shift From US to European Stocks
BCA Research recommends investors rotate capital from U.S. equities into European stocks as doubts grow over the sustainability of the AI investment boom.
Investment research firm BCA Research recommends that investors rotate their exposure from U.S. equities into European stocks, specifically targeting defensive sectors. In a research note issued November 6, the firm argued that Europe is positioned to outperform Wall Street because of cheaper valuations, lower energy costs, and reduced exposure to the volatile artificial intelligence trade.
Chief strategist Jeremie Peloso highlighted growing concerns regarding the sustainability of AI capital expenditure and the potential for increased regulation. While the firm does not predict an immediate collapse of the AI boom, it suggests these factors make U.S. stocks a riskier bet. Conversely, BCA Research notes that falling oil and natural gas prices could improve European corporate profit margins and increase household purchasing power, which may ease inflationary pressures in the eurozone.
Despite the preference for European markets over U.S. markets, the firm maintains an overall underweight position in equities compared to government bonds. This cautious stance stems from a bearish outlook for the eurozone economy as it heads into 2027.
