What’s behind the surge in global earnings growth?

Global equities are still benefiting from a powerful earnings-led rally, even as growth remains only moderate and geopolitical tensions stay elevated. The AI capex boom and higher energy prices have done much of the heavy lifting, but they are being joined by broader secular support from banks, industrials, and stronger corporate governance in markets like Japan.

International equities have outpaced the U.S. this year, with emerging markets and Japan leading on upgraded profit expectations. Some of the recent boost from weaker currencies and energy prices may fade, but AI-related spending looks set to remain a key driver into next year.

For investors, the backdrop still favors regions tied to structural growth themes rather than pure macro recovery. The main risk is that current earnings momentum proves too optimistic if supply constraints ease or geopolitical shocks disrupt sentiment again.