European Tech Stocks to Watch: Beyond the Magnificent 7

Much of the investor world remains fixated on US Big Tech, particularly the “Magnificent 7.” However, recent market volatility and the emergence of competitive forces underscore the need for diversification. For discerning investors, European tech companies present compelling alternatives, many of which boast high ratings from leading analysts.

In 2024, the Magnificent 7 (Tesla, Meta, Microsoft, Apple, Amazon, Alphabet, and Nvidia) propelled market gains, accounting for over half of the S&P 500’s impressive 25% return. However, the landscape shifted dramatically in January 2025. The introduction of a lower-cost AI model by Chinese startup DeepSeek triggered a reassessment of AI spending across the tech sector. Nvidia, a linchpin in the AI boom, saw its market capitalization plummet by a record-breaking $589 billion in a single day.

Navigating Volatility: The Case for European Tech

Nvidia’s stock price remains under pressure, and other Mag 7 members have struggled to maintain momentum. Microsoft and Alphabet, despite robust revenue and profit growth, witnessed stock declines following their recent earnings releases. This volatility underscores the importance of diversifying tech holdings beyond the US market. Europe’s burgeoning tech sector offers a compelling solution. Let’s explore some of the top-rated European technology stocks garnering attention from investment analysts.

ASML: The Gatekeeper of Advanced Chipmaking

ASML, the Dutch semiconductor equipment manufacturer, holds a unique position in the global tech ecosystem. It is the sole producer of the sophisticated machines employing extreme ultraviolet (EUV) lithography, a technology essential for manufacturing the world’s most advanced AI chips.

ASML exceeded expectations in Q4 2024, reporting revenue of €9.2 billion and earnings per share of €6.85. CEO Christophe Fouquet expressed confidence that DeepSeek’s lower-cost model would ultimately stimulate higher demand for AI chips. However, escalating trade tensions, particularly between the US and China, pose a potential headwind for the chip sector. Despite this, ASML continues to receive “buy” or “overweight” ratings from prominent financial institutions like Deutsche Bank and JPMorgan. JPMorgan highlights ASML’s dominant market share in the lithography segment, projected to exceed 80-89%.

SAP: Powering Business Transformation with AI

German software giant SAP, a provider of business process management solutions, consistently earns high praise from analysts. SAP’s stock has surged nearly 61% in the past year, reaching new highs.

In its full-year 2024 results, SAP reported a 10% increase in total revenue (€34.2 billion) and an 11% rise in cloud and software revenue (€29.8 billion). Notably, its total cloud backlog soared by 40% to €63.3 billion, indicating robust future growth. While operating profit declined due to restructuring costs, SAP forecasts substantial profit growth in 2025. Deutsche Bank Research analyst Johannes Schaller emphasizes the unprecedented visibility provided by the cloud backlog, anticipating sustained revenue acceleration beyond 2025. SAP’s integration of AI into its cloud offerings is also noteworthy, with 50% of new cloud deals now incorporating an AI component.

Prosus: A Global Tech Investor Making Waves in Food Delivery

Amsterdam-listed investment group Prosus, a subsidiary of South African internet giant Naspers, recently captured headlines with its €4.1 billion acquisition of food delivery company Just Eat Takeaway. This strategic move significantly bolsters Prosus’s position in the rapidly expanding food delivery market.

While Prosus’s stock dipped slightly after the announcement, it remains near record highs, having climbed 49% over the past year. Deutsche Bank maintains a “buy” rating, viewing the acquisition as a compelling transaction for both Prosus and Just Eat Takeaway. Analyst Silvia Cuneo suggests the current share price represents an attractive entry point for investors. Prosus’s half-year results showcased strong growth, with revenue up 26% year-on-year and a significant improvement in adjusted EBITDA.

RELX: Data and Analytics Driving Record Performance

FTSE 100 constituent RELX, a leading provider of business information and data analytics, recently achieved an all-time high stock price following its impressive full-year results.

RELX reported 7% revenue growth (£9.4 billion) and a substantial increase in pre-tax profit. The company plans £1.5 billion in share buybacks in 2025. CEO Erik Engstrom attributes RELX’s success to the integration of AI and other advanced technologies into its tools. JPMorgan Cazenove, maintaining an “overweight” rating, considers RELX a top pick in the media sector, citing its structural growth and strong cash generation.

Infineon Technologies: A Key Player in Europe’s Chipmaking Hub

While Nvidia remains a dominant force in the chipmaking industry, Infineon Technologies is emerging as a significant competitor. The European Commission recently approved a €920 million aid package to support Infineon’s construction of a new chipmaking plant in Dresden, Germany, further solidifying the region’s position as a chipmaking powerhouse.

Infineon’s Q1 2025 results revealed a better-than-expected start to the year, driven by the growing demand for power supply solutions in AI data centers. Despite a quarter-on-quarter revenue decline, Infineon returned to profitability. The company raised its full-year outlook, anticipating flat to slightly up revenue growth. Barclays analysts, with an “overweight” rating, highlight Infineon’s resilience in the face of industry-wide softness, attributing its strong performance to its auto division and microcontroller business.

Conclusion: Exploring Opportunities Beyond US Big Tech

The European tech landscape offers a diverse range of investment opportunities with significant growth potential. While the Magnificent 7 continue to command attention, diversification into European tech stocks like ASML, SAP, Prosus, RELX, and Infineon Technologies can provide investors with exposure to innovative companies and potentially mitigate risks associated with US market volatility. These companies, with their strong fundamentals, positive analyst ratings, and strategic positioning in key growth sectors, warrant serious consideration for any investor seeking to broaden their tech portfolio.