European Corporate Earnings Forecast to Rise 20.7% in Q3 2026

LONDON, United Kingdom — European companies are expected to report a 20.7% increase in third-quarter earnings from a year earlier, according to new estimates from London Stock Exchange Group, as higher energy profits and demand for technology infrastructure strengthen the outlook for the region's largest publicly traded businesses.

The forecast, published in LSEG's October 15 STOXX 600 Earnings Outlook, points to another quarter of substantial profit growth despite uncertainty surrounding inflation, borrowing costs and global technology valuations.

Analysts also expect revenue among STOXX 600 companies to increase 11% year over year. The earnings outlook is slightly below the previous week's estimate of 21%, but the latest figures indicate that corporate profitability remains relatively strong as the reporting season gathers pace.

European equities have already shown signs of resilience. The STOXX 600 ended October 16 with its strongest weekly performance since June, supported by encouraging company results even as concerns about artificial intelligence investment weighed on technology shares globally.

Energy and Technology Lead Earnings Expectations

Energy companies are expected to make the largest contribution to third-quarter profit growth, with sector earnings forecast to rise 124% from the same period last year, according to LSEG's research report.

Elevated oil and gas prices have improved the earnings outlook for producers and other businesses benefiting from stronger energy markets. Supply constraints and shifting global market conditions have helped support prices, although higher energy costs continue to affect businesses and consumers across the wider economy.

The sector's contribution is substantial enough to change the overall picture. Excluding energy companies, STOXX 600 earnings are forecast to increase 8.3%, considerably less than the headline 20.7% estimate.

Technology companies represent another important source of growth. LSEG projects a 32.7% increase in third-quarter technology earnings, reflecting demand for the equipment, components and infrastructure supporting investment in artificial intelligence.

European companies do not dominate the global market for advanced AI processors, but several supply equipment, industrial technology and communications systems used throughout the industry's expanding infrastructure.

Recent results from semiconductor equipment companies ASML and Aixtron, along with telecommunications equipment supplier Ericsson, have helped support investor confidence in European technology businesses.

The industrial sector is also expected to contribute to the improvement, with earnings forecast to rise 11.1%. Demand for specialized equipment and infrastructure provides opportunities for companies whose businesses extend beyond consumer spending.

The improving earnings outlook comes after a period of volatility in global equity markets, particularly among companies associated with the rapid expansion of AI infrastructure.

Investors have questioned whether the substantial capital required to build data centers and computing capacity will generate sufficient returns. Concerns about debt financing and competition have contributed to fluctuations in technology shares.

European equities also showed signs of resilience during the reporting period, as expectations of stronger corporate profits helped support investor sentiment. The earnings outlook suggests that improving profitability across several major sectors could provide further support for European stock markets.

Individual company results helped sustain the advance. German semiconductor equipment supplier Aixtron rose 6% after reporting stronger-than-expected third-quarter order intake and maintaining its annual guidance.

Wind turbine manufacturer Nordex gained 12.3% after delivering better-than-expected quarterly operating profit and raising its full-year margin forecast.

The market reaction was not uniformly positive. Schneider Electric shares fell 1.8% despite the French industrial company raising its annual profit and revenue targets for a second time, illustrating how investors may respond differently to strong results when expectations are already elevated.

Corporate earnings growth can support share prices by improving the relationship between company valuations and underlying profitability. However, stronger profits do not automatically produce higher stock prices, particularly when investors have already anticipated favorable results.

Financial companies are expected to report third-quarter earnings growth of 8.6%, according to LSEG, suggesting that European banks and other financial institutions could contribute to the region's broader profit expansion.

The banking outlook comes amid changing interest rate expectations and concerns about economic activity. Higher rates can support lending margins in some circumstances, but they can also weaken borrowing demand and increase pressure on households and businesses.

Consumer-facing companies present a more divided picture. LSEG expects earnings among consumer noncyclical businesses, including producers of everyday goods, to increase 7.3% in the third quarter.

Consumer cyclical companies, which are more exposed to discretionary purchases, are forecast to experience a 2.6% earnings decline. The estimate represents a substantial deterioration from earlier expectations and reflects weaker conditions in areas such as automotive manufacturing and luxury goods.

Slower demand in China has been one source of pressure for European automakers. Volkswagen and BMW reported weaker third-quarter deliveries, adding to concerns about the industry's exposure to international consumer spending.

The difference between essential goods and discretionary purchases suggests that European consumers remain selective about spending, even as the broader corporate earnings outlook improves.

The strength of the earnings season will become clearer as more companies publish their results. LSEG's report showed that five STOXX 600 companies had reported third-quarter earnings at that stage, with four exceeding analyst expectations.

The geographic outlook is also uneven. Analysts expect earnings growth in 14 of the 16 countries represented in the index, with Poland and Norway among the strongest performers. Germany and Ireland are expected to record declines.

The latest LSEG projections indicate that European companies are entering the reporting season with substantial earnings growth expected across several major industries.