Goldman Sachs has already said that non-U.S. stocks will beat the S & P 500 this year . Now it's doubling down on Europe's fortunes, saying the region's outperformance has further to go. Peter Oppenheimer, chief global equity strategist at Goldman, said that the last few months represent "one of the few times since the Great Financial Crisis that European equity markets have been outperforming the U.S. in both local and U.S.$ term." The Euro Stoxx 50 , an index of 50 stocks in the euro zone area, has underperformed the S & P 500 by more than 115 percentage points over the past decade. However, that trend has reversed over the past year, with the European index beating the U.S. benchmark by 10.9%, according to FactSet data. "While Europe has been outperforming since late 2022, it still trades at a discount compared with the U.S. in virtually every sector. The discount in the U.K. is even bigger," Oppenheimer and colleagues said in a note on Feb. 2. "If things progress well for global growth and interest rates remain stable, we would expect Europe to continue to outperform the U.S." .SPX .STOXX50 1Y line The Wall Street bank said Europe's "reversal of fortune" was due to relatively cheaper valuations, better fundamentals, and increased fund flows into the continent this year. It said the region will also benefit from a shift from so-called "growth" stocks (mostly found in the U.S.) to "value" European stocks, with companies on the continent better suited to navigate a higher interest rate environment than their American counterparts. In a separate note to clients last month, Goldman Sachs' Investment Strategy Group said they expect the Euro Stoxx 50 to rise to as much as 4,300 by the end of 2023 — which would be a 17% increase from the index's 2022 close. The prediction is in contrast to UBS'. The Swiss bank expects the Europe Stoxx 600 to fall 8% by the end of the year, while Bank of America is forecasting a 20% drop by the second quarter , with a quick rebound in the second half of the year. 'Nowhere to hide' However, Goldman Sachs added that if there were a decline in U.S. stocks this year, there would be "nowhere to hide" for investors. Historical data shows that when the S & P 500 falls by 20% or more, other markets usually follow with comparable drops, according to Goldman. The bank said the same also applies during minor corrections of 10-20%. "If the U.S. equity market were to suffer a significant 'drawdown', it is unlikely that Europe would decouple – despite its own merits (or domestic growth)," the strategists said.