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Goldman Sachs has outlined three major themes investors should watch as Europe’s corporate earnings season approaches, warning that elevated market expectations could lead to stronger share-price swings if companies disappoint.
The investment bank said analysts will focus on how higher energy costs ripple through corporate supply chains, how European companies exposed to Chinese competition perform, and what executives reveal about artificial intelligence adoption and potential cost-saving initiatives.
Europe’s earnings season will accelerate in late July, with more than 90% of the STOXX 600 market capitalization expected to report results by the end of August. Current consensus forecasts call for 11% year-over-year earnings growth in the first half of 2026, driven largely by commodity-related companies. Excluding commodities, earnings growth is projected at a more modest 6%.
Goldman Sachs continues to forecast 10% earnings growth for the STOXX 600 in 2026, with commodity producers expected to deliver earnings growth exceeding 50%. Energy companies have seen earnings estimates revised 28% higher since the beginning of the second quarter, supported by stronger refining and operating margins.
Outside the commodity sector, earnings and profit margin expectations have remained relatively stable. Goldman said this reflects investor expectations that the economic impact of the Iran conflict will be temporary, although the optimism also raises the threshold for companies to outperform during the reporting season.
The bank also noted that expanding valuations in sectors such as banking and technology, fueled by price-to-earnings multiple expansion during the second quarter, increase the likelihood of sharp market reactions to earnings misses as investors closely evaluate long-term growth prospects.
Goldman described the broader European macroeconomic backdrop as supportive, citing stronger manufacturing activity, improving GDP estimates, and a weaker EUR/USD exchange rate during the second quarter, which should provide a modest boost for companies with significant overseas or U.S. dollar-denominated revenue.
In the energy sector, analysts expect solid Brent crude price realizations but believe investor attention will increasingly shift toward capital expenditure plans. Unlike the 2022 energy boom, Goldman expects higher profits to be directed toward increased investment rather than substantially larger shareholder returns.
