European investors shift focus to local stocks as U.S. tech concerns grow

European stock markets have seen a positive start in 2025, with a shift in investor interest from U.S. equities to European stocks. This change follows concerns over high U.S. stock valuations and declining earnings in tech companies. The development of DeepSeek, a Chinese AI company offering a low-cost alternative to U.S. language models, has raised questions about the growth of U.S. tech firms. European stocks are now trading at a significant discount compared to U.S. stocks, prompting some investors to reconsider their strategies. Recent data shows that European investors have begun to reverse years of net outflows from their domestic markets. After three years of losses, euro zone equity funds experienced small net inflows in late 2024, indicating a potential shift in investment preferences.