What does the EU have that the U.S. does not?

The European Union offers potential advantages for investors that are often overlooked due to the heavy focus on U.S. technology leadership, suggests Macquarie Global Strategy. The argument is based on several areas where Europe already commands strong global positions, such as luxury goods, tourism, and pharmaceuticals. This is complemented by evidence that European businesses are adopting new technology at rates comparable to the U.S. The luxury goods and experiences industry, valued at approximately $1.6 trillion, is projected to surpass $2 trillion by 2030, with Europe leading through brands like Hermes, LVMH, and Ferrari.

The tourism sector contributes about $1 trillion annually, around five times the U.S. level. European and Swiss pharmaceutical companies, including Roche, Novartis, Sanofi, and Novo Nordisk, compete effectively with U.S. counterparts in terms of science and product offerings. While technology remains a weak spot for Europe, it still accounts for around 20% of global patents.

The investment case might not hinge on creating technology, but rather on adopting it. Around 37% of EU companies employed artificial intelligence in 2025, on par with U.S. businesses, and European firms match or surpass American counterparts in the use of advanced digital technologies, particularly robotics. Valuations and earnings also support this argument.

Excluding the U.K., Europe is projected to record a 19% earnings-per-share growth in 2026, compared to a 12% growth expected in December 2025. European equities carry an equity risk premium discount of over 300 basis points relative to the U.S. Macquarie sees Europe's abundant pool of surplus capital and pressure for increased spending as potential factors driving improved returns on equity.

Currently, European return on equity stands at approximately 11%, leaving room for enhancement, in contrast to roughly 23% for the S&P 500.