Goldman Sachs Strategists say European stocks are likely to get a boost this year as investors seek to diversify away from the U.S. market, which is characterized by high valuations and a heavy concentration of tech stocks.The team at Goldman Sachs, led by Sharon Bell and Peter Oppenheimer, raised its year-end target for the pan-European Stoxx 600 index to 625 points, representing an upside of about 4% from Monday’s all-time closing high.“Given that the U.S. market is both expensive and suffers from excessive concentration of exposure, we advocate for diversification,” the strategists wrote in a report.They noted that U.S. investors, concerned about the impact of a weaker dollar, are seeking alternative sources of growth from other regions of the world. The strategists pointed out that positions in European equities remain low, as 2025 is merely a year of tentative buying following sustained net selling from 2022 to 2024.The team stated that this year should be a strong one for European small-cap stocks. These stocks will benefit from improved economic growth, a stable interest rate environment, increased M&A activity, a stronger euro, and falling oil prices.