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Whether it’s the Magnificent Seven big tech stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) or non-tech giants such as Eli Lilly in healthcare, JPMorgan and Goldman Sachs in banking or Boeing and Lockheed Martin in defence, there’s no shortage of US corporate world-beaters. So many in fact, you’d be forgiven for thinking that the world’s largest economy has a monopoly on the biggest and best companies. It doesn’t.
Europe has global leaders too. It’s just that compared to the great American success stories we often hear about, the great European equivalents seemingly fly under the radar, giving the (wrong) impression that Europe’s homegrown champions lack a sprinkling of stardust. What’s more the region’s ranks of world-leading companies could be set to rise as there appears to be a growing realisation that Europe needs to foster its own champions in response to a more unilateralist US and a more assertive China. Together with governments racing to rearm and tentative signs of peace in the Middle East (welcome news for the energy-dependent region), now could be a good time to get to know Europe’s champions better.
Big tech
Most are familiar with the ambitious plans to build data centres to power Artificial Intelligence (AI) initiatives, such as the large language models of Anthropic and OpenAI. The numbers are huge. The big four hyperscalers—Alphabet, Amazon, Meta and Microsoft—plan to spend US$800bn in 2026. Next year, their combined spend could top US$1tn.
Note: not a European name in sight. But data centres require semiconductor chips and lots of them. Chip manufacturers are therefore benefiting from strong demand. Many are looking to expand production. Good news for semiconductor equipment manufacturers, such as ASML. The Dutch company’s photolithography machines enable semiconductor companies to make chips by projecting patterns onto the surface of wafers. This is the most expensive and critical stage of the manufacturing process. A good business to be in then, particularly as ASML is the industry leader with a 90% market share. No surprise it is Europe’s largest company with a market cap of around €700bn.
Europe has its own chip makers too. Infineon Technologies (€100bn market cap) is a leading provider of power semiconductors. Revenues are being driven by strong end-markets, including electric vehicles and the energy transition. The firm is also a beneficiary of the AI boom as more of its power chips are finding their way into data centres—sales in this segment have doubled in the past year and now represent 10% of overall revenues.
Granted not as big as their US counterparts, but Europe has big tech stocks too.
Big banks
The same can be said of the banking sector. European banks adopt a range of strategies and operate in multiple geographies. Some are focused solely on their domestic or regional markets; others are more internationally diversified. Banco Santander (€180bn market cap) has significant exposure to growth markets in Latin America. Dutch-based ING (€80bn market cap) serves around 40m customers across its operations in 38 countries.
The European banking sector is benefiting from a number of tailwinds: high interest rates (compared to the pre-pandemic era) are enabling banks to generate healthy interest rate spreads (the difference between the rate a bank earns on loans and the rate it pays on deposits); strong equity markets are fuelling a recovery in investment banking fees; a step-up in fiscal stimulus, most notably in Germany with its huge defence and infrastructure package, promises to be a multi-year growth driver.
Big defence
This jump in defence investment can be traced back to the outbreak of the Russia/Ukraine conflict in 2022. Pressure from US President Donald Trump for Europe to shoulder the responsibility for its own security, and NATO upping members’ defence spending targets to 5% of GDP from 2% by 2035 (3.5% to be spent on core defence) have provided further urgency to Europe’s rearmament drive. European defence contractors can be expected to play a major role. One of these is Saab (€29bn market cap). Once synonymous for its cars (production ceased in 2011), the Swedish-based group is now known for its defence offering. Instead of cars, Saab sells munitions, missile and surveillance systems, fighter jets and submarines.
Similarly with Airbus (€160bn market cap), the aerospace giant is more famous for its commercial aircraft business, but did you know around 20% of sales come from its space and defence division?
Big pharma
Europe too has its fair share of big pharma stocks. Based on revenues alone, three European drug companies ranked in the top ten in 2024—Roche (€300bn market cap), Novartis (€280bn market cap) and Sanofi (€92bn market cap) (source: Drug, Discovery & Development). All three have market-leading positions in their fields of expertise. Roche specialises in biotechnology, pharmaceuticals, and in-vitro diagnostics. It is the world's largest biotech company and a global leader in cancer treatments. Novartis has a product suite including treatments for various types of cancers and respiratory diseases, as well as conditions such as psoriasis. Sanofi is one of the largest producers of vaccines, delivering more than 500m doses each year, and also specialises in treatments for rare genetic and blood disorders.
Big oil
European companies are good at discovering commercial oil and gas finds too. In 2022, TotalEnergies (€150bn market cap) made one of the largest discoveries in sub-Saharan Africa. The company is targeting up to 750m barrels of oil from the Venus discovery, offshore Namibia, as part of the field’s first phase of development. TotalEnergies is also viewed as being ahead of its peers when it comes to the energy transition, allocating a significant portion of annual capital expenditure towards businesses, including renewable energy, deemed viable in a de-carbonised economy.
ENI (€60bn market cap) is also good at finding hydrocarbons. The firm’s Zohr field offshore Egypt is the largest natural gas discovery ever made in the Mediterranean. As main operator, ENI successfully brought the field on stream less than two years after its discovery. Uniquely among oil majors, ENI adopts a ‘satellite’ strategy: it sells minority stakes in some of its projects to private equity investors or lists a minority stake via an IPO to maximise the value and opportunities.
A long tail
The above is not an exhaustive list. Other European companies in different sectors also have leading positions in their markets. Take Schneider Electric (€155bn market cap) which specialises in electricity distribution and automation management. Multi-year themes, including electrification and data centres, are driving the French industrial group’s end-markets. Step into a lift and chances are you will see the Schindler’s (€30bn market cap) name on the control panel. That’s because the Swiss group is one of the world’s largest providers of lifts/elevators, escalators and moving walkways. And we haven’t touched on Europe’s dominant position in the luxury goods sector. Take a bow LVMH (€245bn market cap) and Richemont (€110bn market cap). Point made?
The question of exceptionalism
The term American exceptionalism covers a range of observations: from the sustained outperformance of the US economy to America’s cohort of world-leading companies. The European economy cannot match the performance of the US (not yet at least). But Europe does have world-beating stocks. On one level then, it could be time to start celebrating European exceptionalism.
Investors should remember that the value of investments, and the income from them, can go down as well as up and past performance and forecasts are no guarantee of future returns. You may not recover what you invest.
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