But this expectation is already built into the prices.
For the US to continue to outperform, it will have to deliver even more than already expected.
This is likely to be difficult as US sentiment is at an all-time high and EU sentiment is at an all-time low.
US tech companies are not so expensive because they are earning so much money today, but in the expectation that they will earn even more money in the future.
A bet on the US is therefore a bet that the market is not yet optimistic enough.
For the US to continue to outperform, it will have to deliver even more than already expected.
This is likely to be difficult as US sentiment is at an all-time high and EU sentiment is at an all-time low.
US tech companies are not so expensive because they are earning so much money today, but in the expectation that they will earn even more money in the future.
A bet on the US is therefore a bet that the market is not yet optimistic enough.
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@PowerWordChill a very understandable argument and, in my view, naturally reflects the risk or the other side of the coin.
From my point of view, however, there are two points I would like to mention:
- In recent years, analyst estimates have mostly been beaten, so based on the past, there is a possibility that analyst estimates will continue to be outperformed.
For me, however, the example of Alphabet is more relevant. The share is currently trading at ~$196, which corresponds to a P/E ratio of 24.5 based on 2024 earnings of $8. Earnings of $10.2 are expected for 2026, which would mean a P/E ratio of 19.
The McDonalds share would have a P/E ratio of 22 in 2026 ($290 and profits of $14.5). This means that McDonalds would be valued higher than Alphabet, even though the latter has higher growth.
Assuming Alphabet maintains its current P/E ratio of 24.5, this would justify a price of ~$250 in 2026. That would be a performance of +27% over the next two years.
Of course, this only answers the question of why Alphabet and not McDonalds, but not the comparison with the EU.
Due to the weakness of Germany, the high energy prices, the lack of tech companies and the high level of regulation, I do not see a catalyst for significant outperformance here.
From my point of view, however, there are two points I would like to mention:
- In recent years, analyst estimates have mostly been beaten, so based on the past, there is a possibility that analyst estimates will continue to be outperformed.
For me, however, the example of Alphabet is more relevant. The share is currently trading at ~$196, which corresponds to a P/E ratio of 24.5 based on 2024 earnings of $8. Earnings of $10.2 are expected for 2026, which would mean a P/E ratio of 19.
The McDonalds share would have a P/E ratio of 22 in 2026 ($290 and profits of $14.5). This means that McDonalds would be valued higher than Alphabet, even though the latter has higher growth.
Assuming Alphabet maintains its current P/E ratio of 24.5, this would justify a price of ~$250 in 2026. That would be a performance of +27% over the next two years.
Of course, this only answers the question of why Alphabet and not McDonalds, but not the comparison with the EU.
Due to the weakness of Germany, the high energy prices, the lack of tech companies and the high level of regulation, I do not see a catalyst for significant outperformance here.
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