Early European 2Q earnings beats remain highly concentrated, with ASML contributing significantly

Overview

This report is Goldman Sachs' weekly European strategy and 1H/2Q26 earnings tracker, focusing on early STOXX Europe 600 earnings releases, earnings and sales surprises, sector earnings revisions, valuation, fund flows, volatility, and macro indicators. The report notes that the European 2Q26 earnings season has just entered its acceleration phase, with about 20% of tracked companies having reported so far, representing about 30% of STOXX 600 market capitalization, and the final week of July is expected to be the peak reporting period.

Core views

The core view is that European earnings growth momentum remains fairly strong, but early earnings beats are not evenly distributed. H1 2026 EPS growth is on track to reach the strongest level in nearly three years, at about 12% for the STOXX 600 overall and about 7% for the median company; commodities are the main driver, but growth still stands at about 6% excluding commodities. Early 2Q earnings surprises appear healthy at first glance, but ASML contributes materially to the market-cap-weighted result, with the beat falling from 4.3% to 2.7% excluding ASML. At the sector level, technology, healthcare, financial services, and energy are performing well, but there is also divergence within technology, as STMicroelectronics missed expectations and gave weak Q3 guidance.

Analysis framework

The report uses an earnings-season tracking framework, comparing EPS and sales performance of early-reporting companies on both equal-weighted and market-cap-weighted bases, and combines this with historical average surprise levels, sector contribution, price reaction, earnings revisions, valuation percentiles, fund flows, and macro indicators to assess the state of the European equity market.

Methodology notes

• Earnings trackingEPS surprise tracking

  Equal-weighted and market-cap-weighted earnings surprise

  The report uses both equal-weighted and market-cap-weighted measures to assess the deviation of company earnings from market expectations, distinguishing breadth from the impact of large-cap companies on aggregate results.

• Market reactionReporting-day relative price reaction

  Relative price reaction on earnings release day

  The report compares the share-price performance relative to the market on the reporting day for companies beating or missing expectations, to gauge market sensitivity to earnings surprises.

• Earnings revisionsEPS revisions by sector

  Sector EPS growth and revisions

  The report presents 2026E and 2027E EPS growth, one-month revisions, and year-to-date revisions by STOXX Europe 600 sector to identify the direction of earnings upgrades and downgrades.

• Valuation analysisHistorical valuation percentile

  Historical valuation percentile

  The report evaluates European valuations using metrics such as 12-month forward P/E, EV/Sales, EV/EBITDA, P/B, free cash flow yield, CAPE, and ERP relative to their historical ranges since 2000.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ASML HOLDING NV

  An important contributor to the STOXX 600 earnings beat

  Strengths

  ASML contributed most of the upside in the technology sector and in market-cap-weighted earnings surprises, highlighting its high weight and influence in European technology earnings.

  Weaknesses

  The report does not provide a single-company rating, target price, or detailed financial forecasts for ASML, and its contribution also highlights excessive concentration in the overall beat.

  Comparison

  Excluding ASML, the STOXX 600 market-cap-weighted earnings surprise falls from 4.3% to 2.7%, showing that ASML significantly lifts the index-level result.

  Risks

  If semiconductor demand or order expectations are revised down, ASML's negative impact on index and technology-sector earnings sentiment could be amplified.

• STOXX Europe 600

  The main European equity benchmark tracked in the report

  Strengths

  H1 2026 EPS is expected to grow 12%, and early 2Q earnings are overall better than expected.

  Weaknesses

  The breadth of upside surprises is limited, with only 26% of early reporters beating EPS expectations by more than 5%.

  Comparison

  Excluding commodities, H1 earnings growth falls to 6%, indicating that part of the growth comes from cyclical sectors such as energy and basic resources.

  Risks

  Against a backdrop of high initial expectations, companies missing earnings expectations may face greater share-price punishment.

• European energy stocks

  Earnings beneficiaries driven by commodities

  Strengths

  Equal-weighted earnings surprise among early-reporting energy companies is about 12%, while oil prices rising to about $100/bbl and a 50% increase in TTF prices over two weeks support 3Q26 earnings.

  Weaknesses

  As of the report, only about 20% of energy companies had reported, so the sample remains limited.

  Comparison

  Energy and commodities are key drivers of H1 earnings growth; excluding them, overall growth declines materially.

  Risks

  If energy prices retreat or geopolitical tensions ease, the momentum of earnings upgrades may weaken.

• European capital goods

  A sector benefiting from AI-related capex and data-center demand

  Strengths

  AI-related demand supports growth, and data-center-related activity remains strong; among covered 2Q26 companies, sales all beat expectations and more than 90% beat EBITA expectations.

  Weaknesses

  Rising macro risks may affect subsequent orders and the sustainability of capital spending.

  Comparison

  Compared with traditional cyclical demand, AI-related capex provides stronger structural support for capital goods.

  Risks

  If AI capital spending slows or the pace of data-center construction falls short of expectations, growth support may weaken.

Key data

• 2Q reported coverageAbout 20% of tracked companies; about 30% of STOXX 600 market capitalizationThe report says reporting activity will accelerate significantly in the following week.
• H1 2026 STOXX 600 EPS growth12%One of the strongest growth rates in nearly three years.
• H1 2026 median company EPS growth7%Indicates that growth is not entirely driven by index weights.
• Earnings growth excluding commodities6%Commodities are the main driver, but growth remains reasonable even after exclusion.
• 2Q market-cap-weighted earnings surprise4.3%Based on early-reporting STOXX 600 companies.
• 2Q equal-weighted earnings surprise2.6%Roughly in line with the historical average earnings surprise level.
• Market-cap-weighted earnings surprise excluding ASML2.7%Shows that ASML contributed materially to the aggregate beat.
• Share of early reporters with EPS beat greater than 5%26%Below the historical average of about 40%, indicating narrow breadth of upside surprise.
• Share of early reporters broadly in line with expectations约60%Most companies did not significantly beat or miss expectations.
• Average EPS surprise in the technology sector约7%Mainly driven by semiconductor companies, with ASML making an outstanding contribution.
• Average earnings surprise in healthcare约8%Early reporters performed better than expected.
• Average earnings surprise in financial services约7%Early reporters performed better than expected.
• Equal-weighted earnings surprise in the energy sector约12%As of the report, only about 20% of energy companies had reported, supported by higher energy prices.
• Average relative price reaction for beat companies+2%Average reporting-day performance relative to the market.
• Average relative price reaction for miss companies-3%Companies missing expectations are being punished more severely.

Impact & implications

In terms of investment implications, the European equity earnings cycle remains supported, but investors need to watch the concentration of beats and the high expectations bar. Large-cap technology names such as ASML may amplify index-level earnings surprises; if subsequent reporters cannot broaden the breadth of earnings beats, the market may continue to punish misses harshly. The energy sector remains supported in the near term by higher oil prices and TTF prices, while capital goods are supported by AI-related capex and data-center demand, though macro risks still need to be monitored.

Risks

• Earnings upside surprises are concentrated in a small number of large-cap companies and a few sectors, with insufficient breadth.
• The market is punishing companies that miss earnings expectations more heavily, reflecting a high initial expectations bar.
• There is divergence within the technology sector, with STMicroelectronics missing expectations and issuing weak Q3 guidance.
• Energy earnings are sensitive to oil prices, TTF prices, and the Middle East situation; a pullback in commodity prices would weaken support.
• The reporting sample is still at an early stage, and the peak of the earnings season could change the current conclusion.
• Some European valuation metrics are at relatively high historical percentiles; if earnings revisions weaken, valuation pressure may rise.

What to watch

• Whether the peak reporting period in the final week of July broadens the breadth of earnings beats.
• Whether technology-sector and STOXX 600 overall earnings surprises can hold up excluding ASML.
• The impact of energy prices, TTF prices, and the Middle East situation on 3Q26 energy earnings expectations.
• Whether AI-related capex and data-center demand continue to support sales and EBITA in the capital goods sector.
• The direction of EPS revisions, especially for Technology, Energy, Financial Services, and STOXX 600 ex Commodities.
• Whether the share-price punishment for earnings misses continues to exceed historical levels.
• Changes in European equity fund flows, volatility, correlation, and macro PMI/CAI/MAP indicators.